Manchester City Council has granted permission for 500,000 sq ft of mixed-use development in First Street adjoining Whitworth Street West.
Ask Developments and the council now have consent for the new Cornerhouse and Library Theatre Company building, a 208-bed Innside hotel, 30,000 sq ft of retail, leisure, food and beverage in up to ten units, and a 700-space multi-storey car park.
Dutch architect Mecanoo won an international design competition to design the new arts centre. Outside it there will be a new landscaped square equipped to host a variety of outdoor events and performances.
Ken Knott, chief executive of Ask Developments, said: "The momentum is really building now and our joint plans with Manchester City Council will soon become a reality.
"We believe that First Street North will become a genuinely unique, colourful and vibrant place capable of attracting a wide range of leisure, hotel and associated activities. The new cultural facility will form the centrepiece of this new destination, creating a distinct feel and atmosphere in this part of the city."
Enabling works will start before the end of the year allowing the scheme to open in early autumn 2014.
A planning application covering the 2.6-acre plot at the southern end of First Street has recently been submitted for the mixed use, retail-led element of the scheme.