Hull is to host the Turner Prize, one of the biggest events in British art, when it is UK City of Culture in 2017.
The contemporary art award and corresponding exhibition will be staged at the city's Ferens art gallery.
It is the first event to be announced for Hull's City of Culture year. The gallery will get a £4.5m facelift to bring it up to the required standards.
The prize is held outside London biennially, with Glasgow playing host this year.
Hull 2017 chief executive Martin Green said the prize would boost Hull's image in the art world and attract more visitors to the city.
"You can only see it if you come to Hull and that's what's great about these major events. They act as a honeypot," he said.
"All those people who come will spend money here and stay, drink and shop here. So this is great world-class culture being used as a regenerative and economic boost to the city."
Mr Green is hoping that the year's festivities will attract a million visitors to Hull and be worth £60m to the city's economy.
Hull will be the fifth city outside London to host the Turner Prize, following Liverpool, Gateshead, Londonderry and Glasgow.
The Tate's director of national and international programmes Judith Nesbitt said she was "confident that the Turner Prize is going to be an enormous success" in Hull.
"We know there's a real appetite for art here," she said. "This is a gem of an art gallery with a cracking collection.
"And it does revitalise and keep the prize really dynamic to have it as something that is on the move, literally."
The total City of Culture budget will be almost £100m, including £80m for capital building projects and £18m to stage events.
Councillor Steven Bayes, Hull City Council's portfolio holder for UK City of Culture, said: "We've not got a major international event coming to the city, which we've always wanted, because it's about raising the city's profile."
The long-term goal is to replicate the success of Glasgow and Liverpool after they were European Capitals of Culture, he added.
"We look at places like Glasgow and Liverpool, which are now key city destinations for people to visit. That's where we'd like to get to," he said.
"Twenty years ago, no-one would have thought of going to them as tourist destinations. So that's the change we're trying to make with our city, and hopefully bring more wealth to our city."
Film artist Duncan Campbell won the £25,000 Turner Prize in 2014.