The Mayfair Hotel will be demolished and replaced by 201 flats.
Permission has been given to pull down the hotel on St Saviour's Road.
Dandara will build the one and two-bedroom apartments for Andium Homes.
The hotel is closing at the end of October after more than 50 years of welcoming guests.
Owners, the Modern Hotel Group, said the continual challenges facing tourism, coupled with the impact of Covid-19, had made it increasingly difficult to operate.
Three islanders named in New Year Honours List
Three islanders have been included in King Charles III's New Year Honours List.
80th anniversary of the first Red Cross food parcels arriving in the Channel Islands
In late December 1944 the SS Vega docked in St Peter Port and afterwards St Helier to deliver food supplies to hungry islanders.
CI Forecaster predicts fog will lift and flights resume
Since Christmas Eve, fog has forced several Channel Island flights to be cancelled and delayed.
