The country began setting up an alert network after the 2004 Asian tsunami that killed or left missing at least 230,000 people in a dozen Indian Ocean countries. Two-thirds of the deaths were reported on the northern tip of Indonesia's Sumatra island.
A German-made buoy and one donated by Malaysia are already in place.
The US$600,000 (EUR447,000) Indonesian-made device is being installed 260 kilometers (160 miles) south of the West Java town of Merak, said Ridwan Djamaluddin, chief of Tsunami Buoy Oceanographic Monitoring.
The buoy will be used to detect abnormalities on the surface of the sea the next time an earthquake triggers waves, transmitting data by satellite to officials on land within three minutes, Djamaluddin said.
"The buoy has been tested and it works well," he said. "It will help alert communities on western Java and Sumatra island to tsunamis in the future."
Indonesia, the world's largest archipelago, is prone to seismic upheaval due to its location on the so-called Pacific "Ring of Fire," an arc of volcanos and fault lines encircling the Pacific Basin.