Preparation works have started on the Jesmond site with the main construction programme due to start in May.
The five-storey terrace building will contain 63 apartments alongside boutiques, cafes and restaurants in the heart of the Brandling Village Conservation Area.
The development will replace the vacated Newcastle High School for Girls.
David Thompson, Regional Director at Tolent, said: “We are really pleased to have secured this flagship development with Pegasus Life. The project builds upon our existing portfolio of projects in both the luxury residential and supported living sectors.
“We see a huge market for this type of development in the North East, and feel that we have the skills required to bring them to fruition.
“We understand the importance of engaging with our neighbours on this challenging site and look forwards to on-going engagement through the community panel, Tolent and PegasusLife will be setting up.”