The Holocaust Memorial and Tolerance Centre will be located in Graz's synagogue, said Ruth Kaufmann, the leader of the Jewish Cultural Association in Graz.
The centre is due to open in November 2015.
"Austria's first Holocaust centre will commemorate the many victims of the Shoah, document Jewish life in the past and present and explore the sensitive subject of the Holocaust in an age appropriate way," Kaufmann said at a press conference.
The target group for the centre is primarily students and young people. The synagogue receives around 5,000 student visitors a year.
Asked why it has taken 70 years to set up such a centre in Austria – when they already exist in the US, Poland, Germany and France – Kaufmann said she thought Austria found it hard "to look at our own history, but I think it will give Graz, Styria, and the whole country a way of working through its trauma."
"We have endeavoured to meet a strong demand from teachers by providing information about the Holocaust – but we were always aware that such a sensitive topic needed a professional exhibition and an in-depth approach," Kaufmann said.
Kaufmann estimates that the costs of establishing the centre will be between €400,000 and €500,000. The state of Styria and the city of Graz will foot some of the bill but the centre will also be dependent on private donors.
The main exhibition will focus on the lives of two Jewish boys living in Graz between 1938 and 1945 – illustrating life before the Anschluss, attacks against Jews, and the mass murder in the concentration camps.
“We tell the story of two boys, Daniel and Bertl. Bertl is able to flee, but Daniel stays and is hidden, is betrayed and finally murdered in a concentration camp,” said Thomas Szammer, a cultural anthropologist and Education Officer for the Jewish Community in Vienna.
Daniel is a fictional character, meant to symbolise the millions of Holocaust victims. Bertl however is based on a real person, Berthold Kaufmann – the 90-year-old father of Ruth Kaufmann who escaped Austria in 1939 and is one of the last Graz-born Jewish survivors.
The centre will also provide workshops and lectures for students and teachers, and produce teaching materials and research about the Holocaust.
It’s estimated that between 1,700 and 2,500 Jews from Styria were murdered during the Holocaust.
The Graz synagogue was destroyed during the November pogroms in 1938, and rebuilt in 2000.