It will store videos, messages and other data generated by European users from the short-form video-sharing app.
Until now all of its users' records were stored in the US, with a back-up copy held in Singapore.
The announcement comes at a time when President Trump has threatened to ban the app in the US on the grounds its Chinese ownership makes it a national security risk.
TikTok's Beijing-based parent company Bytedance denies the charge. However, it is in talks to sell its US, Canada, Australia and New Zealand operations to Microsoft.