The YMCA Western Gateway base, next to the town's iconic Victorian Farley Clock Tower, will be completely refurbished and parts rebuilt as part of the major regeneration project.
The new facilities will include a café, coffee bar, five enterprise starter units, a fitness and well-being centre, learning centre, youth zone and chapel as well as 96 studio apartments and a range of office accommodation for social businesses.
It would provide homes for vulnerable people include the homeless and young parents and would aim to help continue the charity's work to cut rough sleeping.
Some of the funding for the project has come from the Homes and Communities Agency.
Steve Clay, chief executive for YMCA Black Country Group,said: "Many people across successive generations in the Black Country can recollect a time when they benefitted from YMCA services. This investment, our biggest ever investment in the region, will ensure the YMCA can serve local people for many decades to come."
The work will be carried out by developer Jessup Build Develop.
Clive Jessup, chief executive of Jessup Build Develop said: "We are delighted to have been able to make this project a reality. All the updated facilities will provide the YMCA with state of the art accommodation, new enterprise facilities and services
for young people and the community."
The project is scheduled for completion by November 2015 and the rest of the cash has come from YMCA, ERDF, and the Black Country LEP's Growing Places funding.
The YMCA Children & Family Nursery Centre which shares the Carters Green site is unaffected by the development and will remain open throughout. Similarly the current
fitness, well-being and community services will continue to run from part of the site.
The YMCA has operated in West Bromwich for more than 126 years. Its first premises were built in St MichaelStreet in 1888 before relocating to Carters Green in the 1960's. It now delivers services from over 20 locations across the Black Country.
As well as the traditional supported housing settings, the YMCA Open Door Project provides supported lodgings in family homes for teenagers right across the Black Country as well as emergency Nightstop accommodation for young people in crisis.
It has been based in West Bromwich since 1888.
The charity's Open Doors project has helped to provide more than 12,000 nights of accommodation for homeless teenagers in family homes across the Black Country since 2009.