The project will comprise the world's largest indoor theme park, covered by a glass dome during the sweltering summer months, and 100 hotels and serviced apartments.
It will house the largest shopping mall in the world with an area of 8 million sq ft, which will take the form of an extended retail street network.
Additional districts within the project will include a wellness dedicated zone catering to medical tourists.
The project was launched by UAE vice-president Sheikh Mohammed bin Rashid Al Maktoum yesterday and will be developed in multiple phases. But the details of the cost or the completion date was not disclosed.
Once completed, about 180 million visitors are expected to visit the extended retail street network.
"The growth in family and retail tourism underpins the need to enhance Dubai's tourism infrastructure as soon as possible. This project complements our plans to transform Dubai into a cultural, tourist and economic hub for the two billion people living in the region around us; and we are determined to achieve our vision," Sheikh Mohammed said.
"Tourism is key driver of our economy and we aim to make the UAE an attractive destination all year-long. This is why we will start working on providing pleasant temperature- controlled environments during the summer months," he said.
The project, developed by Dubai Holding, will introduce the concept of an integrated pedestrian city connected to the mall and offering a wide range of leisure, retail, cultural, wellness, recreation and hospitality options under one roof.
Tourists will be able to enjoy a week-long stay without the need to leave the City or use a car.
The Celebration Walk, similar to the Ramblas Street in Barcelona, will connect the cultural district to the rest of the Mall.
"This project is a product of extensive research studying international and regional tourists' requirements and preferences...The project will be developed in phases in alignment with the gradual growth of family tourism in Dubai," said Mohammed Abdullah Al Gergawi, chairman of Dubai Holding, said.