The utility, which previously contracted out the analysis of around 300,000 drinking water samples a year, is investing £8.6 million in the two facilities.
The Newport laboratory is due to be up and running at the end of 2012 and employ 40 people. A smaller laboratory of 10 staff, at Bretton in north Wales, has recently become operational.
A spokesperson said: “We are continually reviewing our internal structures to improve cost and operational efficiency, and the insourcing of laboratory services and sampling will help us achieve this.”
The company has appointed Howard Handley, formerly of the Forensic Science Service, to head up the laboratory.
Handley said: “I am delighted to be joining Dŵr Cymru and the water quality team at this exciting time as the new North Wales laboratory is now commissioned and we are progressing with development of the facility in Newport. There is a great team already on board and new opportunities for scientists.
“We have a great responsibility and a huge challenge ahead of us. But unlike my previous job in the Forensic Science Service there will be fewer bodies and blood on the carpet!”