“This is an important milestone that allows us to finalise the baseline design of this very ambitious project, which will vastly advance astronomical knowledge,” says Tim de Zeeuw, ESO’s Director General. “I thank the site selection team for the tremendous work they have done over the past few years.”
ESO’s next step is to build a European extremely large optical/infrared telescope (E-ELT) with a primary mirror 42 metres in diameter. The E-ELT will be “the world’s biggest eye on the sky” — the only such telescope in the world. ESO is drawing up detailed construction plans together with the community. The E-ELT will address many of the most pressing unsolved questions in astronomy, and may, eventually, revolutionise our perception of the Universe, much as Galileo's telescope did 400 years ago. The final go-ahead for construction is expected at the end of 2010, with the start of operations planned for 2018.
The decision on the E-ELT site was taken by the ESO Council, which is the governing body of the Organisation composed of representatives of ESO’s fourteen Member States, and is based on an extensive comparative meteorological investigation, which lasted several years. The majority of the data collected during the site selection campaigns will be made public in the course of the year 2010.
Various factors needed to be considered in the site selection process. Obviously the “astronomical quality” of the atmosphere, for instance, the number of clear nights, the amount of water vapour, and the “stability” of the atmosphere (also known as seeing) played a crucial role. But other parameters had to be taken into account as well, such as the costs of construction and operations, and the operational and scientific synergy with other major facilities (VLT/VLTI, VISTA, VST, ALMA and SKA etc).
In March 2010, the ESO Council was provided with a preliminary report with the main conclusions from the E-ELT Site Selection Advisory Committee 
. These conclusions confirmed that all the sites examined in the final shortlist (Armazones, Ventarrones, Tolonchar and Vizcachas in Chile, and La Palma in Spain) have very good conditions for astronomical observing, each one with its particular strengths. The technical report concluded that Cerro Armazones, near Paranal, stands out as the clearly preferred site, because it has the best balance of sky quality for all the factors considered and can be operated in an integrated fashion with ESO’s Paranal Observatory. Cerro Armazones and Paranal share the same ideal conditions for astronomical observations. In particular, over 320 nights are clear per year.
Taking into account the very clear recommendation of the Site Selection Advisory Committee and all other relevant aspects, especially the scientific quality of the site, Council has now endorsed the choice of Cerro Armazones as the E-ELT baseline site 
“Adding the transformational scientific capabilities of the E-ELT to the already tremendously powerful integrated VLT observatory guarantees the long-term future of Paranal as the most advanced optical/infrared observatory in the world and further strengthens ESO’s position as the world-leading organisation for ground-based astronomy,” says de Zeeuw.
In anticipation of the choice of Cerro Armazones as the future site of the E-ELT and to facilitate and support the project, the Chilean Government has agreed to donate to ESO a substantial tract of land contiguous to ESO’s Paranal property and containing Armazones in order to ensure the continued protection of the site against all adverse influences, in particular light pollution and mining activities.
The independent E-ELT Site Selection Advisory Committee (SSAC) has been analysing results from several possible sites worldwide in great detail. Similar efforts have been carried out by the Thirty-Meter Telescope (TMT) site selection team from the US. For the sake of efficiency, the sites pre-selected by the TMT team (all in North and South America) were not studied by the SSAC, as the TMT team shared their data with the SSAC. Two of the sites on the SSAC short list, including Armazones, were on the TMT list.
The full ESO Council Resolution reads as follow:
Resolution of ESO Council on the Baseline Site for the E-ELT
* the very clear recommendation from the Site Selection Advisory Committee that the E-ELT should be located on Cerro Armazones in Northern Chile
* the considerable scientific synergy that would result between the E-ELT and future facilities in the Southern Hemisphere, most notably ALMA and SKA
* the operational and scientific synergies with Paranal that would result
and expressing its warmest appreciation for
* the very generous offers from Spain and Chile to host the E-ELT
* the very considerable contributions to the quality and depth of the discussion on the siting of the E-ELT made by Chile and Spain in the course of developing their offers;
Council has concluded that the overriding driver for the decision on the location of the E-ELT should be the scientific quality of the site. The scientific qualities of Cerro Armazones and the positive impact that locating the E-ELT there will have on the future scientific leadership of ESO are sufficiently compelling to outweigh the very substantial offer made by Spain.
Council has therefore resolved to approve the recommendation of the Director General to adopt Cerro Armazones in Chile as the baseline site for the E-ELT.
Council noted that this decision is essential for the completion of the construction proposal for decision at a later date.
Source: ESO - European Southern Observatory