The promenade is being called the Linq and will link casinos on the east side of Las Vegas Boulevard with restaurants, bars and a 550-foot observation wheel similar to the London Eye but taller.
The developers say the Linq will be similar to the Grove in Los Angeles, which Caruso also developed.
Calling the Linq project Sin City's first major development after the Great Recession took its toll on tourism, Caesars spokeswoman Jan Jones that the construction will employ 3,000 workers to build something that will cater to 21- to 46-year-olds - a set of tourists expected to make up more than half the market in four years.
"We're not just building another casino or hotel rooms," Jones said. "What we need is new energy and new attractions that continue to bring customers to Las Vegas - and new customers."
The project calls for the existing O'Sheas casino to be moved. The Imperial Palace casino and hotel will get a makeover and be rebranded.
The Linq is set to open in June 2013.
The Associated Press contributed to this report.