Palestine's first planned city Rawabi has secured approval from the Palestinian Authority and the Palestinian Authority and the Palestinian Higher Planning Council.
Arabic for 'the hills', Rawabi is estimated to cost $1bn and is being touted as the largest private sector project.
It was first proposed at the Palestinian Investment Conference in Bethlehem in 2008.
The Palestinian Authority will provide off-site infrastructure, while the development company Bayti will design and develop the city.
Initially planned by Aecom, the multi-phase project will feature residential, retail and leisure facilities, two mosques, a church, a hospital, a cinema and a 15,000-seat amphitheatre.
Mutaz Khdeir from Bayti said the project will have 6,000 residential units.
The amphitheatre would be modelled on the traditional Roman design, complete with cafes and restaurants.
Development is being funded by the Qatari company LDR and Palestinian multi-millionaire Bashar al-Masri.