Entrepreneurs, crafters and creatives will be able to move into a new 5,000m2 workspace facility which is set to be built in the heart of Hainault Forest.
Created from refurbished Victorian farm buildings, The Forge aims to "bridge the gap between traditional industries of the iconic forest" and the emerging small to medium businesses in the borough.
The project was made possible after Redbridge Council won £1.2milllion from the Mayor of London's Good Growth fund, and it will also create new jobs and provide new vocational training for the community all based and strongly themed about Hainault Forest.
In total, the local authority has been given almost £7m towards restoring the country park - including a £4.2m from the National Lottery Heritage Fund to reinvigorate the iconic landscape and protect ancient species.
Council leader councillor Jas Athwal said: "This is more fantastic news for Hainault.
"The forest is a magnificent urban oasis in our borough and the funding from the Mayor is another huge boost in our efforts to rejuvenate a very special place.
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"The project is a good example of how our regeneration of Redbridge is benefiting the whole community by supporting businesses and creating jobs and training opportunities in the area.
"I'd like to thank the Mayor for his generous support, which along with the other investment is helping mark a new chapter in the iconic forest's history."
Deputy mayor for planning, regeneration and skills, Jules Pipe, said: "The Forge is a great example of how the Mayor's Good Growth Fund helps give Londoners greater access to green spaces.
"As London moves towards becoming a National Park City, Redbridge Council is creating an important space within a much-loved forest which will support entrepreneurs and bring businesses together - as well as creating jobs and training opportunities for generations to come."
Covering a total of 800 acres Hainault Forest includes 250 acres of greenbelt, ancient woodland and a Site of Special Scientific Interest (SSSI).
It is the last fragment of a medieval Royal hunting forest established by Henry I that included Hatfield and Epping.
The forest is a vital green space, with 500,000 visits projected annually.