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It will be the first major reconfiguration of the Norman Foster-designed building since it opened in 1991.
New owner Manchester Airports Group (MAG) will invest £40m on the works and a further £40m will be spent by retailers and commercial partners.
Earlier this week MAG selected BAM Construction, Galliford Try and Carillion for a three-year capital projects framework.
Stansted managing director Andrew Harrison said: “Today marks the start of a significant investment programme to transform the terminal and help deliver our ambitious plans to radically improve Stansted and make it the airport of choice in London for airlines and passengers alike.
“The way airlines and passengers use the airport has dramatically changed over recent years with far fewer passengers using check-in desks or travelling with hold baggage but spending more time in the departure lounge.
“This exciting transformation project responds to these changing trends and will create a quicker and more efficient security process and bring some sparkle to what is already a fantastic terminal.
“Our focus is to provide great service and facilities and put Stansted in the strongest position to compete effectively for new routes, airlines and passengers and this transformation of our terminal is a critical element in achieving this aim and central to our future growth plans for Stansted.”
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