Julie James, Welsh minister for housing and local government, said last week that the decision had been taken due to the increasing divergence between planning law in England and Wales.
The new planning inspectorate for Wales is expected to be operational by the end of the current Welsh assembly term in May 2021, she said.
James said: "Planning law and policy has diverged and continues to diverge at an accelerating rate from England, in order to meet the unique needs of communities and businesses in Wales.
"We are also moving forward to consolidate and unify planning law in Wales to form a separate Welsh planning code. For these reasons, I have instructed officials to begin work on a separate, dedicated service for Wales."
Decisions and recommendations on major infrastructure, planning appeals and local development plans (LDPs) are currently issued by the Planning Inspectorate for England and Wales, which will retain these responsibilities until the new service is established, the Welsh Government said.
The Planning Inspectorate already has a Wales division, based in Cardiff, which manages appeals casework and examination of local plans using a dedicated team of Welsh inspectors and administrators.
Last November, the former Welsh minister for energy, planning and rural affairs Lesley Griffiths announced the Welsh Government would consider the need for a separate inspectorate for the country.
In a written statement, James added: "I am mindful of the need to ensure applications for infrastructure schemes, planning appeals and the examination of LDPs are not interrupted or delayed, as we move to the new service.
"Communities and businesses need to retain confidence that the planning system will continue to deliver.
"Officials will work closely with the Planning Inspectorate to devise the most effective way forward for the new organisation, whilst protecting the Planning Inspectorate Wales Division’s reputation for integrity and excellence and delivering decisions in accordance with Welsh Government’s targets."
The move was welcomed by the Royal Town Planning Institiute (RTPI) Cymru. Director Roisin Willmott said: "Given the marked divergence between the two planning systems both in terms of policy and legislation it makes sense to have an autonomous service for Wales.
"Scotland and Northern Ireland have independent services and these work well for their respective jurisdictions and much can be learned from their models to create a service to fit Wales’ needs."
Last December, saw publication of the tenth iteration of Planning Policy Wales which included a new focus on promoting wellbeing.
Major infrastructure applications currently under consideration by the Planning Inspectorate include a new power line across the Isle of Anglesey.