Duffy was picked following a pitch involving a number of other design companies from around Asia.
The project, which includes branding, interior design, construction in partnership with international architects Perkins & Will, and merchandising, aims to showcase Sony's range of digital, IT and networked integrated audiovisual and lifestyle products in an interactive and experiential manner.
Duffy regional creative director Chris Lee said: "Our vision is to build an experience for Sony where the products are the hero. The central idea for the branding and visual elements in the showroom is to keep them evolving constantly, reflecting Sony's culture and philosophy of constant innovation."
The 700 square metre facility, expected to open some time in next year's second quarter, is aimed at the local Chinese market and has been designed so that each visit would be a new experience for the consumer.
It will be located on Huaihai Road, in the heart of Shanghai's premium retail district.
Duffy won the assignment after the agency's US and Asian offices joined forces in a team jointly led by Lee and Duffy founder and worldwide chairman Joe Duffy.
Fallon and Duffy regional managing director Charles Edwards said the showroom concept also aimed at overcoming strong competition from local and multinational brands.
"This is a high-level plan to demonstrate the enrichment value Sony can give people, something that others cannot," Edwards said.
He added that if it proved to be successful in Shanghai, the idea could well be replicated in other key markets in Asia.