Diggers have moved in to start construction work on the new £60m Leeds Arena.
The 13,500-capacity concert and events venue at Claypit Lane will take two years to build.
It is hoped the arena will attract an extra million visitors and add around £25.5m a year to the city's economy, creating around 450 construction jobs.
Leeds City Council is contributing £20m to the project, with the rest coming from commercial parties.
Councillor Richard Lewis, executive member for city development, said: "I cannot overestimate the part it will play in helping this city's economy to continue to grow and attract investment and jobs.
"I am delighted to say that we are now seeing owners of neighbouring buildings bringing forward detailed investment and development proposals, all of which will help regenerate the area and create jobs."
The arena will be a theatre style venue with a honeycomb exterior to be lit by different coloured lights.