Leeds Council secured £250,000 funding for the project in December 2018 in a joint partnership with local businesses.
Work was originally set to begin early this year, but after a delayed start construction workers have now arrived on site and have started to pull up the old surface near Beckett's Bank pub.
Greek Street has been partly pedestrianised since 2016 and is filled with bars and restaurants.
Under the new plans, there will be longer pedestrianised hours and the road will be levelled for improved accessibility.
Speaking after the council secured funding for the project, Leeds City Council leader Judith Blake said: "The pedestrianisation of Greek Street has helped to underline the street’s appeal as a major night time destination and it is currently thriving.
“Over 250 new jobs have been created on the street since 2016, and for the first time, every premises at ground floor level is fully occupied by bars or restaurants.
“We are pleased to have secured a significant sum from businesses to deliver this scheme, and it follows on from a successful redevelopment of Bond Court over the last few years, which was also delivered by private funding.”