Deputy Prime Minister Nick Clegg joined council and business leaders to sign a £300 million Growth Deal for Sheffield City Region.
The Local Enterprise Partnership secured the landmark sum in July.
It is hoped it will create more than 28,000 jobs and pay for training for 40,000 people.
The official signing ceremony took place at the Electric Works, home to 33 creative and digital companies in Sheffield city centre.
It was attended by LEP chairman James Newman and combined authority deputy chairman Coun Eion Watts.
Nick Clegg, who chairs the Local Growth Cabinet Committee, said: “We are ending a culture of Whitehall knows best.
“Decisions over spending on infrastructure, business support and housing are being made at a truly local level.
“Instead, we are placing the power and money in the hands of the people who know how to spend it best, making a real difference to Sheffield City Region.
“This Growth Deal will create thousands of jobs, provide incredible new training opportunities for young people, build thousands of new homes and improve transport links for everyone - building a stronger economy and a fairer society.”
James Newman, chairman of Sheffield City Region LEP, said: “Signing our deal with the Deputy Prime Minister marks an important milestone in the process of taking control of our local economy. This deal will unlock millions of pounds of investment to grow the Sheffield City Region economy and create jobs.
“The Sheffield City Region LEP achieved the fifth biggest deal with Government of all areas in England.”