Clarion Housing Group will demolish existing homes on the run-down Barne Barton estate to make way for 204 homes.
The estate near the Tamar Bridge was once the largest naval settlement in the country.
Bob Beaumont, Director for Regeneration at Clarion Housing Group said: “We are thrilled that Plymouth City Council has backed our plans to transform the Barne Barton estate.
“Our vision is to create a truly vibrant and sustainable community which will bring long term social, economic and environmental benefits to Plymouth.”
The scheme was boosted with a £450,000 grant from the Government’s estates regeneration fund and has already scooped two national awards for its approach to planning and design.
Nationally Clarion is investing £2.6bn in regenerating its existing communities, including Barne Barton.