The former Mill Street Garage sits on land next to the old Sack Works off Corn Hill in the city centre - beside the railway line and facing the canal.
Once the derelict garage is razed it will enable the removal of the dilapidated roof structure on the Sack Works and the stabilising of its walls and gables for its future development.
Ion Development is leading on the works on behalf of the Interchange Partnership.
They are expected to take around a month and will pave the way for the whole Sack Works site to be marketed for commercial use.
City of Wolverhampton Council Head of City Development, Paul Lakin, said: "This is another important step forward for the wider Interchange project.
"The old Sack Works site sits in a prominent location within the Interchange area and this is the start of bringing it back to life after decades of lying empty.
"It presents an excellent commercial opportunity and we will ensure any development is also sensitive to the history of the building and the surrounding area."
Steve Parry, Managing Director, Ion Development said: "The demolition of the former Mill Street Garage is the pre-curser to a development which will become mixed use leisure and office.
"The old Sack Works site is in a perfect setting, next to the canal, to offer an excellent environment for both leisure and business use."
The works form part of the Interchange masterplan and follows the announcement in March of the i9 development - designed by Glenn Howells Architects.
This eye catching modern office development is to be built on Railway Drive, and emerged as a scheme following the success of the award winning i10 building opposite.
It is hoped i9, which will provide 50,000 sq ft of Grade A office space and will become a national or regional headquarters for a major business.
Other land earmarked for development beside the railway and canal as part of the Interchange project includes the Banana Yard and Boat Yard at Broad Street Wharf.
- released: Monday 22 May, 2017