The building was acquired by Rotherham College in 2014, before being earmarked for demolition in the Town Centre Masterplan which was adopted in 2017.
Councillors Saghir Alam and Taiba Yasseen knocked out a brick to symbolise the start of a new era for the markets in Rotherham town centre.
The redevelopment of the site will also see a new dining area on the first floor of the Indoor Market.
According to Rotherham Council, the site will “provide a vibrant link from the Indoor Market to the Outdoor Market, potentially allowing opening hours to extend into the evening.”.
On the second floor of the Indoor Market, the existing arcade units will be refurbished to create office space for charities, social enterprises and voluntary groups.
A new terraced public space will open up the market to Eastwood Lane and Drummond Street, and a new library will be built on the corner between Henry Street and Drummond Street and will include a café, meeting rooms, and gallery space.
Councillor Saghir Alam, cabinet member for corporate services, community safety and finance and ward member for Boston Castle, said: “The redevelopment of the market’s complex and the new central library are key projects in the regeneration of our town centre.
“More than fifty years since the opening of the Centenary Market, this redevelopment will house our great local traders in an environment fit for the 21st century, helping to bring good quality, affordable produce to the next generations of shoppers.”
Councillor Taiba Yasseen, chair of the health select commission, and ward member for Boston Castle, added: “The investment we’re making will bring impressive improvement and an enjoyable space in which people will be able to shop and relax.
“There’ll be something for everyone at the new markets and that can only be good news for the town and its economy.”
Rotherham Council secured funding from the Government’s Future High Street Fund to part finance the improvements.
Rotherham’s markets date back to at least the 13th Century, and an Act of Parliament enabled the town to enlarge the marketplace and erect proper slaughterhouses in June 1801.
The council purchased the land around the market place in 1879 and built an iron and glass market hall, which was destroyed in a fire in January 1888.
In 1889 a new brick market hall opened on the same site.
Rotherham also held a cattle market at the Crofts and by 1851 was selling around 3,000 sheep and 200 cattle each week.
A new cattle market was opened on Corporation Street in 1926, when the Crofts site was chosen for the development of a new courthouse.
In 1971 the market relocated to its current home and was renamed the Centenary Market.