Council chiefs have put forward a full business case in an attempt to claim the cash from the Government's Future High Streets Fund.
The money will be used to carry out the first phase of Wolverhampton Council's vision to bring more people into the city centre.
It will see roads on Victoria Street, Skinner Street, Salop Street and School Street made traffic free – along with the area leading up to, and including, the outside of the Civic Halls.
A new public square will also be created off Victoria Street, bosses have said.
Councillor Harman Banger, cabinet member for city economy, said: "We believe we have a strong case for this funding.
"Wolverhampton is experiencing an unprecedented level of growth and opportunity. We are working with a wide range of key partners and stakeholders to continue to stimulate and accelerate this growth.
"The Future High Streets Fund gives us a fantastic opportunity to build on this work and, most importantly deliver real, tangible benefits for our diverse communities."
Ahead of the final bid submission in early April, Wolverhampton Council will be sharing the ideas and proposals with the public and businesses.
Councillor Banger added: "Re-imagining and reinventing our city centre is a key priority.
"We have made a strong start, working with partners to establish transformational schemes.
"Support through the Future High Street Fund will build on the strong delivery that is already underway in the city centre, it will enhance and connect an area of the city centre that has, over recent years faced a number of challenges."