The 23-acre urban regeneration scheme known as Attercliffe Waterside scheme will transform brownfield land either side of the Sheffield and Tinsley Canal.
It will become one of the largest zero carbon communities in the UK, featuring more than 1,000 homes alongside creative workspaces, an arts venue and shops.
Extensive remediation works will now get underway, with new infrastructure installed before construction work commences on site in 2024.
Jonathan Wilson, managing director of Citu, said that planning for phase one of the scheme would be submitted in the coming weeks.
This will include over 400 new homes and the conversion of existing buildings to form extensive arts, leisure and workspace opportunities.
The houses will be built using Citu’s timber-framed housing system.
Kate Martin, executive director of City Futures at Sheffield Council, said: “The exchange of this development agreement is a great moment for this regeneration project and we look forward to working with Citu over the coming months and years as it now moves into delivery.
“The transformational scheme will deliver much-needed high-quality homes and jobs and build on the success and momentum of the Sheffield Olympic Legacy Park; £17m of Levelling Up Funding currently being invested in Attercliffe as well as the growing Advanced Manufacturing Innovation District.”