Plans now being drawn-up by Akkeron Leisure include a new arena and four-star hotel.
Akkeron chairman James Brent is also owner of Plymouth Argyle FC.
The proposal backed by the council involves selling the current ice-rink and fun-pool on the site for demolition and redevelopment.
The existing concert arena on the site will be expanded and a new boulevard created linking Millbay with the city centre.
Akkeron plans to build a new rink as part of Argyle’s stadium redevelopment and transform the Pavilions site creating up to 800 construction jobs.
Plymouth councillor Ian Bowyer, cabinet member responsible for finance, said: “This is a great day for the city.
“It represents a significant step forward and a new dimension to the sports, leisure and cultural offer for the city.”