A new theatre company funded by Hollywood actor Michael Sheen will be based in the Welsh city where his theatrical journey started.
Welsh National Theatre will set up its headquarters overlooking Swansea Bay in the city's civic centre.
Earlier this year, Sheen said he was funding the new theatre company to fill the gap left by the folding of National Theatre Wales.
National Theatre Wales said it "ceased to exist" last year after £1.6m in cuts to its core funding from Arts Council Wales.
The company is seeking private and public funding, but Sheen previously said he would be self-financing it initially to allow it to "stand on its own two feet".
He said he was "excited" the company would set up its home in a city of "creativity, resilience and inspiration".
"My theatrical journey began on the stage in Swansea as a member of the West Glamorgan Youth Theatre, so it feels fitting to come full circle to base Welsh National Theatre in the city," he said.
"This isn't about just an office space, but a cultural hub which welcomes creatives in."
The council said a proposed public sector hub in the city centre would enable the redevelopment of the building.
The first production, Our Town, will debut at Swansea Grand Theatre in January next year, before touring Wales.
Sheen will also take to the stage in the January production, as well as in a co-production with Wales Millennium Centre later in the year.
Jill Williams, founder of Class Act Theatre School in Swansea said it was an "incredible" gesture.
"It's great that students who are training in Wales are now going to be able to think, 'well actually, I don't have to go to London," she added.
Ms Williams said she hoped it would encourage people will return to the city to pursue careers in the arts.
One of her students, Alaya, 10, said: "It's really good to get more companies about singing, dancing and acting to come to Swansea. I'll probably go there."
Sara, 15, said performing was her passion but "Swansea hasn't got many opportunities."
"But now, it will become more popular with acting and things, so that will be really good," she added.
Richard Mylan, actor and co-director of Grand Ambition theatre group, said: "Traditionally, a lot of our arts is focused on Cardiff."
He said he was "really glad" Swansea was chosen because there was "so much potential in this city. It's thriving".
"I think it's going to kickstart a real resurgence in terms of the younger generation here in Swansea, that maybe traditionally wouldn't want to, or feel the theatre isn't for them."