The city council has backed plans by developer Bellerophon Partnerships Limited (BPL) and Linc-Cymru Housing Association Limitedto deliver the regeneration scheme including 2,150 homes next to the River Taff.
The mixed-use site will also contain a new primary school, shops and restaurants.
BPL Chief Executive Richard Daley said: “This is an historic day for Cardiff.
“Dumballs Road is the only area of land in the city centre that remains in dire need of regenerating and has been a blight on the landscape for far too long.
“The £500 million Cardiff Embankment regeneration programme, which is in the heart of the city’s Enterprise Zone, will deliver major economic stimulus and create thousands of jobs, both in the construction phase and longer-term.”
Cllr Phil Bale, Leader of City of Cardiff Council said: “This is an ambitious, high quality scheme, and a significant achievement by both parties to get it off the ground without public sector funding.”