Sandwell Council chiefs have spent the money ordering the two vehicles – due to arrive later this year – to replace an existing "ageing" bus.
The buses will boast a mini-recording studio, sensory area, virtual reality, smart TVs and gaming consoles to keep youngsters entertained.
The current vehicle was first registered on the road in 1999 and has served people since its launch in 2013, but has become less reliable.
Councillor Simon Hackett, cabinet member for children and education, said: “I attended the launch of the youth bus all those years ago so I’ll be sad to see it go but delighted we’ve been able to invest in two new buses.
“Our youth bus is such an important part of Sandwell’s offer to young people. It allows us to get into the heart of the community and bring activities for young people who might not otherwise travel to a youth club.
“It allows our youth workers to provide targeted support to young people who need it. It’s a safe space where young people can get information and support and meet others.
“It’s a vital service for our young people and we know it’s very popular so it’s a real worthwhile investment with the two new buses expected to attract even more young people.”
The youth bus will conduct its farewell tour throughout the year until Sandwell Council takes delivery of the two new buses – expected to be later this year.
Louise Swinfon, now aged 27, was at the launch of the youth bus in January 2013. She said: “I remember the launch day for the youth bus and was really proud to be involved.
"It has been great to see how popular the bus has been with young people in Sandwell after we helped design it."
Luke Scott, aged 27, added: “It was a great experience and it will be sad when this bus does its last session but it is amazing news that the next generation of young people in Sandwell will be getting two brand new buses later in the year."