The five-year project is expected to make a further 40 per cent of the building open to the public.
The Government said it would allocate $55.4 million to the redevelopment in next week’s state budget, with the library to raise the remainder.
State librarian Justine Hyde said the majestic Queens Hall would become a reading room once again.
“It will restore Queens Hall back to its former glory as a reading room and a public space and a place of wonder and study,” Ms Hyde said.
Part of the restoration involves opening the skylights to flood the hall with natural light.
The Russell Street entrance to the library will also be reopened.
The library attracts 1.8 million visitors every year, more than any other Australian public library.
But Ms Hyde said that meant it was often crammed with people.
“If you come in on a busy day you’ll often see people sitting on the floor because there are no seats, or people lining up waiting for computers because there aren’t enough terminals,” she said.
The redevelopment would also create an “e-town hall”, so regional public libraries could stream programs and events. A children’s space and a digital media centre will also be created.