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Kier is developing 78 homes between Dudley Street and Carder Crescent.
It is part of City of Wolverhampton Council's push to deliver up to 450 homes on the land, which sits south of the town centre and Black Country Route.
Advanced Works to remediate a further 24 to 27 acres of land for residential use are also close to completion and will go to market next month.
Chris King, Managing Director of Kier Living Central, commented: "This is an important milestone for this strategically important residential development.
"The team at Kier has worked hard during the pre-construction stages of the project with City of Wolverhampton Council to establish the solid foundations from which we can create a high quality residential destination in the area that will deliver a real positive, long-term impact to the region."
Councillor John Reynolds, Cabinet Member for City Economy, added: "The Bilston Urban Village scheme is moving forward at a good pace and Kier starting work on the build is hugely encouraging to people and businesses in the area.
"The urban village will be a key part of the wider regeneration of the city, bringing new homes, new jobs and more investment.
"It demonstrates our commitment to Bilston and ensures it will continue to be a thriving area."
The first phase of Bilston Urban Village saw the building of the Bert Williams Leisure Centre and South Wolverhampton and Bilston Academy - improving health and increasing opportunities.
The Advanced Works have seen trees cleared, former factory floors broken up and the old railway embankment removed as the site is levelled.
The developed brownfield land will include extensive areas of open space, footpaths and a water feature.
- released: Tuesday 22 March, 2016