If successful, the £20m funding from the Government’s ‘Levelling Up Fund’ would be used to redevelop Castlegate to unlock potential for future investment.
Castlegate would be revived as a focal point of the city by de-culverting the River Sheaf and introducing new greenery and dedicated public spaces to make the area more attractive.
Land in the area would also be prepared for future uses that focus on education, employment and encouraging healthy lifestyles.
Councillor Terry Fox, leader of Sheffield City Council, said: “Castlegate is a hidden gem in the city centre with huge potential which we hope to unlock through the Levelling Up Fund.
"The area is already home to a lot of great businesses, and it’s important to us that we put the groundwork in place to encourage further investment to the area as well as linking the site up with the rest of the city centre through our award-winning Grey to Green schemes and active travel routes."
Alongside Castlegate, funding has also been requested for two additional projects to create new arts and music destinations in the city centre: Park Hill Art Space and Harmony Works.
Park Hill Art Space would be formed on the Park Hill estate, a short walk from Castlegate, and would feature creative workspaces and learning facilities, as well as a six-acre sculpture park connecting it to Castlegate.
Harmony Works, a collaboration between Sheffield Music Academy and Sheffield Music Hub, would move to a new location at nearby Canada House, giving the organisation a fit-for-purpose, accessible home in the centre of the city.
Plans also include a multi-purpose space to allow students and other users to perform to the public.
Cllr Fox added: “Park Hill Art Space and Harmony Works will introduce much-needed vibrancy into the area and make Castlegate a destination in the city, not just somewhere people pass through. Sheffield has a rich, proud history, and through this funding, we hope to do the site justice and celebrate all it has to offer.”