Buses will be taken off Anketell Street as part of a multimillion-dollar project to upgrade Tuggeranong's town centre.
All buses that travel along the road will be rerouted onto nearby Athllon Drive and Soward Drive from April next year, the ACT government said on Tuesday.
The government also revealed plans to upgrade the laneway between South Point shopping centre on Anketell Street and Lake Tuggeranong.
The upgrade is expected to cost $4 million and construction is set to begin early next year.
Plans for the upgrade include a grass terrace area close to the lake, new trees, improved access for cyclists and space for outdoor dining.
It's expected to be completed by November 2020.
City Services Minister Chris Steel said the plan aimed to revitalise the area and allow for clear access between the town centre and Lake Tuggeranong.
"[The town centre] was designed during the 80s and is looking tired," Mr Steel said.
"We heard from residents that they would like to see an upgraded space with clear views to the lake that draws people in.
"The jewel in the heart of Tuggeranong is the lake and we want more people to use the lake down here."
The removal of buses from Anketell Street comes after a petition signed by more than 700 people was tabled in the Legislative Assembly earlier this year.
Mr Steel said removal of buses from the street would allow for a quieter and more accessible street for pedestrians and nearby businesses.
"Businesses there have told us that they would like to see a cleaner and quieter street with heavy vehicles removed," he said.
"[The reroute] does need capital works and new bus stops and upgrades."
Tuggeranong Community Council vice president Glenys Patulny said the council was thrilled at the outcome.
"It's something we've been lobbying for for years," she said.
"It will bring the community back to the area."
Buses were taken off the street while work was carried out on the revamp.
Businesses in the area said earlier this year a resumption of bus routes in the street would be detrimental to visitors.
The government has flagged further upgrades to the centre of Tuggeranong ahead of the 2020 territory election.
Canberra Liberals deputy leader Nicole Lawder welcomed news of the bus removal, saying Tuggeranong had long been neglected.
She said opposition plans for upgrades in Tuggeranong would be announced next year in the months before the election.
"It's great to see that community pressure has seen the removal of buses from Anketell Street," she said.
"People sitting in cafes and restaurants can enjoy the ambiance without buses going past."