At a meeting today, (Tuesday) cabinet members signed off the scheme to bring a Savoy Cinema along with five established food chains to Waterdale on land next to the Cast theatre.
Developer Muse was due to build a six screen 1,600 seated cinema back in 2014. But the private firm 'couldn't make it work financially' and the project stalled.
The council stepped in and will now act as landowner, funder, developer and landlord to the completed development. The money is coming from the 'investment and modernisation fund'.
Building could begin as soon as November with an projected completion date of late 2019.
Cabinet members approved the procurement and construction of the development with a lease in place with the cinema operator but without any restaurant operators in place.
Once completed, council bosses estimate the development will generate revenue, 100 jobs and £530,000 in business rates from the scheme.
The development will also benefit from £635,000 from the Sheffield City Region.
Coun Bill Mordue, cabinet member for business, skills and economic developement, said: "We've decided to proceed with this scheme acting as landowner, funder, developer and landlord. The council can obviously can borrow money at a cheaper rate than private developers.
"There is definitely demand for this scheme from restaurants and coffee houses.
"This project, I believe will contribute to the regeneration of the area and the wider town centre along with the University Technical College, library and art gallery brings a critical mass to this area and I think this will make it very successful."
Major Ros Jones said she welcomed the report presented to cabinet members outlining the proposals.
"I'm delighted to see the cultural quarter is really helping to transform Doncaster - it's part of our town centre plan and this shows what we can do to bring about regeneration by working collectively in the right way to stimulate the regeneration of our town.
"This is about jobs, growth and regeneration. It ticks all those boxes."
Coun Nuala Fennelly, cabinet member for children, young people and schools added: "I think this is a really, really good idea because this side of town is often left out for young people and all the plans here will them come back here."
Sheffield City Region mayor Dan Jarvis said "Mayor Ros Jones and her cabinet have set out an ambitious but deliverable masterplan to ensure that Doncaster town centre is a vibrant place where more people live, work and visit. Not only will it revitalise our public spaces and help to sustain local shops, but it will also secure the town's role as a key economic driver, creating jobs which are accessible to people across the borough and the wider region.”