Bosses at the company today hailed the 'amazing' news after it was revealed a bid for Arts Council funding had been successful.
The money will be used to transform the former Co-operative store building on Lichfield Street into a permanent home for the company.
Director Jane Ward said: "This has been the most amazing news. Although this money has been awarded by the Arts Council, it is a tribute to all those who have donated money to our original campaign to make the former Co-operative building our permanent home.
"This is going to be a fantastic facility for young people for many years to come and young people will be at the forefront of helping to re-generate Wolverhampton city centre."
Under the £500,000 project, the company will move into the old O'Neill's bar located in the former Co-operative building, giving them a prime spot opposite the Grand Theatre.
Run predominantly by volunteers, the group has trained thousands of young performers over the last 33 years, many of whom have gone on to work professionally in film, theatre and television.
So we are elated to hear that they will be moving to a new home after landing a £384,000 grant from the Arts Council.
This is great news on so many fronts.
It was less than two years ago when director Jane Ward announced that CYT faced a battle to survive after losing its annual grant during a round of city council cuts.
And battle they did, securing funding from other sources through hard work and a series of campaigns.
We take our hat off to Ms Ward and her team for showing such incredible spirit to push on when many others when faced with such a dire situation would have given up.
The group has craved a new home for years having outgrown its previous bases, which saw operations split between two sites in different parts of the city.
Now the £500,000 project will see them move into the old O'Neill's bar located in the former Co-operative building on Lichfield Street.
The level of esteem in which the group is held across the city can be seen from the fact that it managed to raise more than £50,000 towards the cost of refurbishing the new site.
This is a prime spot of land opposite the Grand Theatre that has been crying out for redevelopment, having been derelict since 2010.
The revamp of the building brings the promise of new jobs to the city centre.
It also sees new hope for added investment in a street that has been the home to far too many boarded up buildings over the years.
The success of the CYT proves that people have not given up on Wolverhampton.
There are still those out there who are willing to put their time, effort and money into making an enterprise work in the city.
It brings to mind the hard work Carvers put in to rebuild their business after the devastating fire four years ago.
For the CYT, the next couple of years are set to be a busy time. With its future now secured, the group can focus on getting the new building ready and hopefully becoming an even more vibrant part of life in Wolverhampton.
They had originally planned to move into part of the former Co-Operative store above the Moon Under Water, which is next door to O'Neill's.
But the company snapped up the chance for more prominent ground-floor accommodation in the former Irish bar instead.
Artist impressions of the scheme show how the new site will transform the street.
Large windows will give shoppers a glimpse behind the scenes of rehearsals and costumes as they walk past the venue while plans to restore the shop canopy will see the theatre's name up in lights.
The work will see the building transformed into three rehearsal studios, offices, a theatre wardrobe and film editing suite as well as a café bar and social area for young people.
It is hoped work on the transformation will start later this year.
More than £55,000 towards the £500,000 needed to refurbish the ground floor and basement has already been raised. Of this, £35,000 has been raised through fundraising and donations by both the local community and celebrity supporters including the likes of comedians Greg Davies, Russell Howard and Daniel Kitson at the Hilarity Charity Gala in June last year.
"We have raised £55,000 ourselves and have a few more applications going in to charitable foundations for the balance.
"It will mean a permanent future for us, bringing everything together in one place for the first time in our history. It will extend the range of things that we can offer and the standard at which we can do work and raise our profile massively by being in the town centre."
The Arts Council's small capital funding programme supports organisations to develop resilience by giving them the right buildings and equipment to deliver their work, and to become more sustainable businesses.
Peter Knott, area director at Arts Council England, said: "Central Youth Theatre plays an important role in Wolverhampton's arts scene, giving young people the chance to develop and share their creative talents.
"We're delighted to be investing in plans to give the company a permanent home for the future. By equipping this building with the facilities they need, we hope to see our investment support the region's creative economy to thrive."
Central Youth Theatre is one of three organisations in the West Midlands to be successful in the latest round of investment from the Arts Council's small capital programme.
A total of £840,000 will be invested in the three projects in the West Midlands while 39 organisations across England will receive a share of £10.8 million.
In 2014, the theatre group was one of 12 voluntary organisations to have its local authority funding axed, losing its annual grant of £13,000 amid cuts by Wolverhampton council.