Residents in Little Village and Pilsen complained about the impact the Fisk and Crawford plants had on their health and the environment for decades.
A task force set up by the mayor created short-term recommendations for the sites.
They include demolishing the industrial buildings and creating new commercial and retail projects.
"Our investment will only entice further private sector investment into the neighborhood to take the two coal-fire power plants and make them investments in our neighborhood rather than an eyesore," said Chicago Mayor Rahm Emanuel.
The mayor also announced an $8 million plan to build a park on the site of a former asphalt factory in Little Village.