The Cuba Street Festival is making a comeback after six years.
Wellington City Council is giving $250,000 towards the event which will be held around the Cuba Street precinct every year.
About 150,000 people attended the last event in 2009.
The festival was famous for its extravagant night parade and Latin-American music.
The first revamped event, which is being organised by the Creative Capital Arts Trust, is expected to be held early next year.
Trust general manager Emma Giesen says it is seeking another $250,000 of funding for that event.
She says future events will be different from those in the past.
"The focus on the crowd being very involved, in the show if you like. So for example rather than standing behind a barrier watching a parade go past, the people will be moving around.