"The first planes will be delivered in 2018 and the system is expected to be fully operational around 2027," it said in a statement.
"It's an historic decision that will secure Swedish air combat capability for a long time ahead," Defence Minister Karin Enström said in the statement.
The decision means the country would be able to maintain "strategically important" know-how in the country's aerospace sector, she added.
However, the decision includes a clause allowing the Armed Forces to cancel the order should Switzerland or some other country cancel their planned Gripen orders.
The government said on August 25th last year that it would order between 40 and 60 Gripen jets during the signing of a framework agreement with Switzerland.
The Riksdag approved the government's plans in December, and now the government has decided to order the maximum number of planes called for in the agreement.
The Swiss Federal Council announced in November 2011 that the country would purchase 22 Gripen for an estimated 3.1 billion francs ($3.3 billion), reportedly the cheapest of three offers.
The acquisition has been controversial in Switzerland, where a parliamentary report found that the choice "carries the most risks: technically, commercially, financially and in respect of the delivery date."
The decision has to be ratified by the Swiss parliament this spring before a definitive contract is signed in the summer.
According to the Swedish Armed Forces, Sweden currently has 134 JAS 39 Gripen aircraft of earlier generations in service.
Details about the cost of the deal were not made public.
The announcement comes days after Nato head Anders Fogh Rasmussen warned that Sweden could not count on help from the military alliance if it came under attack.
While Sweden cooperates closely with Nato, it is not a member and the country's major political parties have refrained from pushing the issue, opting instead to maintain Sweden's current policy of non-alignment.
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