The 9km elevated monorail will have 12 stations. It will link the Kai Tak commercial and business developments with the Hoi Bun Road development and the Kwun Tong Ferry pier waterfront development.
It is expected to be commissioned in 2023, at an estimated cost of HK$12bn (£1bn).
An 11km promenade will also be developed.
Permanent secretary for development (works) Wai Chi-sing said that the project will promote the regeneration of Kowloon Bay and Kwun Tong into a new central business district.