Buroj Property Development plans to build thousands of homes, several hotels, a shopping mall and a hospital in the municipality of Trnovo at the foot of Bjelasica, one of four mountains surrounding the capital Sarajevo. Work on the complex is set to begin in April.
"This is my life project and I hope that we will finish it without delay", the company's president Ismail Ahmed said at the signing ceremony.
"I sincerely believe in this because I am convinced that Bosnia is an important global tourist destination that has yet to be discovered," he said.
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The Balkans country of 3.8 million people, 40 percent of whom are Muslims, has registered a significant increase in visitors from Gulf states such as UAE, Qatar and Saudi Arabia in recent years.
The "tourist city" is the latest in a series of large property projects by Gulf companies.
A tourist resort built by a Kuwaiti investor around 30 kilometres (18 miles) from Sarajevo is scheduled to open on Saturday.
Elsewhere, a Saudi company is building a new residential area comprising more than 200 villas in the hills of Sarajevo.
The project is slated for completion by the end of 2016.