In a Q+A session held at Facebook's headquarters in Menlo Park, California, the 31-year-old said the button would be a way for people to express empathy.
He said Facebook was "very close" to having it ready for user testing.
A "dislike" button has been constantly requested by some users since the introduction of the now-iconic "like" button in 2009.
"People have asked about the 'dislike' button for many years," Mr Zuckerberg told the audience on Tuesday.
"Probably hundreds of people have asked about this, and today is a special day because today is the day that I actually get to say we are working on it, and are very close to shipping a test of it."
However he went on to say he did not want it to be a mechanism with which people could "down vote" others' posts.
Instead, it will be for times when clicking "like" on "sad" posts felt insensitive. It will not be called a "dislike button", however, it will be named "Sorry" button as a way to express compassion with each other posts.
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