The city broke ground Wednesday morning at the site of the old municipal airport, where it says "one of world's largest sustainable communities", the Blatchford development, will be built.
Construction can now begin on the first phase of residential development and on a section of the central park.
Once site grading and excavation for the first stormwater pond are complete, the city will start to install underground utilities.
"City council has set ambitious goals for this community, and the start of construction is a significant milestone towards achieving their vision for Blatchford," Mark Hall, executive director of the redevelopment project, said in a news release.
"We have an immense opportunity to not only build one of the most environmentally sustainable neighbourhoods in the world, but to also build a community that allows people to live their lives differently."
The development plan calls for community gardens and energy-efficient green buildings, along with streets designed for walking and cycling.
"Blatchford demonstrates Edmonton's commitment to achieving a healthier, more sustainable and enriched lifestyle for our residents," Mayor Don Iveson said. "This is a once-in-a-lifetime city building opportunity that will allow us to demonstrate extraordinary leadership. Blatchford will become a significant part of the Edmonton story, and will help advance our reputation on a national and international stage."
Removal and recycling of old buildings continues on the site.
In September, city administration will present council with a proposal that calls for an energy system that would provide high-efficiency heating, cooling and hot water for all the buildings in Blatchford.
The first residents could be living in Blatchford by 2016 or 2017, the city said.