Hot air from the Tube will be channeled via the Bunhill Heat and Power network in north London.
The £3.7m project is a partnership between Islington Council, the Mayor of London Boris Johnson, UK Power Networks and Transport for London.
The Bunhill Heat and Power network already supplies more than 700 homes in Islington with greener heating.
It will now be expanded to capture waste heat from a London Underground ventilation shaft and a sub-station owned and operated by UK Power Networks.
London Underground generates large amounts of heat which will be captured from a nearby Northern Line vent and piped into the heat network to warm an extra 500 local homes.
Cllr Rakhia Ismail, Islington Council’s executive member for sustainability, said: “Recycling heat from London Underground and the electrical network are exciting new ideas and a boost to our work to tackle fuel poverty and make Islington a fairer place.”