Two buildings will be demolished in the street and a cafe and meeting place for the Living Well Mataura Church will be built in their place.
The church has been meeting since 2017 in one of the buildings that will be demolished.
The project is being funded by the Pinevale Trust.
Living Well pastor Mike Whale said most of the building where the church was meeting would be demolished.
The wall it shares with the adjacent building where the bakery will be sited will also go, as it is 90% non-compliant with the Building Code.
The Galt building on the river side of the building, which was built in 1908, will also be knocked down.
James and John Galt established a blacksmith and ironmongery business in Mataura in 1892 and the building was used as a store to sell farming implements.
Heritage Properties archaeologist Blair McPhee will be on-site when the building is demolished.
The building is listed on the Gore District Council’s historic heritage register.
Mr Whale hopes to "rescue" the native timber in the Galt building.
The cafe will be at the front of the new building, which will also have offices and an auditorium that will seat 250.
Mataura woman Lisa King will run the bakery and cafe during the week and church members will use the cafe at weekends.
The veranda and power lines in front of the building have been removed and scaffolding for the project will go up this week.
It had taken about six years for the consents to be granted and Mr Whale was "very relieved" the project was under way.
"It’s been a fairly long, drawn-out process."
Entrance to the site will be from the back of the building where the demolition will start.
It will take Ajax Building Contractors staff about 40 weeks to complete the project.
About 45 people attend the church at present.
"We are expecting big things to happen and we’re starting to see them now," Mr Whale said.
Mataura ward councillor Neville Phillips said investment in Mataura was a good sign.
"It is looking positive for the future," he said.
He congratulated Mr Whale on persevering with the project.
"It’s been a long haul for him."
Mataura was often underrated in the eyes of many, but "it’s a small community with a big heart".
The cafe would give the residents and visitors to the town a place to meet, he said.
Mataura Community Board chairwoman Nicky Coates said it was pleasing to see the project go ahead.
"As a community we are excited to see some fresh life breathed into the centre of our town."
