Llanbedr in Snowdonia has missed out on the chance to become the UK's first spaceport. It was one of several sites in the running to launch rockets.
A peninsula on Scotland's north coast has been chosen for the site.
Vertical rocket and satellite launches are planned from the A'Mhoine peninsula in Sutherland which the UK Space Agency said would pave the way for spaceflights.
The agency said the site, between Tongue and Durness, was chosen as it is the best place in the UK to reach highly sought-after satellite orbits with vertically launched rockets.
Highlands and Islands Enterprise (HIE) will be given £2.5 million from the UK Government to develop the spaceport which could be up and running by the early 2020s.
But the UK Government also announced a new £2 million development fund for horizontal launch spaceports across the UK at sites like Llanbedr subject to a successful business case.
The cash is aimed at boosting their sub-orbital flight, satellite launch and spaceplane ambitions.
The space agency said the spaceflight market is potentially worth £3.8 billion to the UK economy over the next decade.