The main beneficiaries of Rotorua's new Cy-Way will be the city's residents, but experts are expecting a tourism spin-off.
Construction for the 23.7km of shared paths is expected to begin late this year and be completed by mid-2018, with the aim of getting an anticipated 1700 people on two wheels daily.
Destination Rotorua marketing general manager Oscar Nathan said the Cy-Way contributed to Rotorua's image as a mountain biking Mecca.
"Rotorua is firmly establishing itself as New Zealand's home of mountain biking and as part of that, getting people out and about on two wheels is a key strategy.
"The urban cycleway network fits perfectly into our existing efforts with other regions, creating the Ride NZ cycling and mountain biking marketing network."