The historic building, located at 1835 W. Harrison, has sat empty for the past 16 years.
Haunting photos show the deteriorating condition of the 104-year-old Beaux Arts landmark.
The building was designed by architect Paul Gerhardt and is listed in the National Register of Historic Places.
The project is headed by the Civic Health Development Group (CHDG), which is led by Chicago-based developer John T. Murphy. The multi-phased redevelopment project is expected to "unlock billions of dollars in investments and jobs," said Murphy.
Construction is set to begin immediately.
The first tenants will be a dual-branded 210-room Hyatt House/Hyatt Place, which is expected to open in 2019 and 2020.
Additional spaces include 71,000 square feet of medical office space and 25,000 square feet of retail.