The scheme, due to be operational by next summer, has been described as having an "enormous environmental benefit to the city", as well as generating income for the council.
Giant's Park on the North Foreshore will be home to the landfill gas-powered electricity generating facility.
The project, co-ordinated by Belfast City Council and engineering company Renewable Power Systems Ltd (RPS) with finance from Ventus Funds, will be run by London based specialists Climate Change Capital.
Electricity will be generated from methane rich landfill gas produced at the former Dargan Road landfill site. The gas is extracted by a system of underground pipes feeding a new generating plant to produce 'green' electricity.
This will initially produce about five million watts of electricity per hour for export to the National Grid which is enough to power up to 6,000 homes.
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Belfast council has also been working in partnership with NIE to install a new cable and electricity sub-station to allow the export of 'green' electricity onto the National Grid.
The innovative project will be the first major redevelopment scheme within the North Foreshore Giant's Park. When completed, Giant's Park will comprise two distinct areas - a world class 220 acres public park alongside a 120 acre 'Environmental Resource Recovery Park'.
Belfast Lord Mayor Tom Hartley said: "The electricity generating facility at Giant's Park will help create a brighter, cleaner and greener future for the city by eliminating the escape of potentially harmful greenhouse gas."
Andy Leach, Managing Director of RPS, said: "The generation of electricity using the methane rich gas collected from landfills is the waste industries least known success story.
"The Dargan Road site, as Northern Ireland's largest landfill site, has the potential to make a significant contribution to Northern Ireland's renewable energy output."
Steve Read from Ventus Funds said there are many other landfill sites in Northern Ireland and elsewhere that could benefit from this technology.
Laurence MacKenzie, Managing Director of NIE, said: "We are delighted to have been able to support Belfast City Council in connecting this important infrastructure project to the electricity network."
North Belfast MLA Gerry Kelly also welcomed the scheme.
He said: "Given the current high price of electricity and its dependency on the price of world oil and energy prices this is a welcome initiative, producing electricity from what we all would consider waste.
"There has been a debate about the use of the North Foreshore site and the landfill that is situated there has raised a fair amount of controversy over the years. This development now sees a positive, green contribution come from the former landfill which will benefit people locally," added the Sinn Fein Junior Minister.
(PR/JM)
