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2 October 2015, 12:34 | Updated: 2 October 2015, 12:35
Voters will choose an elected mayor in Sheffield for the first time in 2017 under a devolution package announced by George Osborne.
Powers over transport budgets and bus services as well as planning will be handed over from Whitehall to city region as part of the Chancellor's so-called northern powerhouse initiative.
The deal, which follows a similar agreement in Greater Manchester, will give Sheffield greater freedom to boost growth, improve skills in the area and tackle the most difficult to help welfare claimants.
Mr Osborne, who is visiting the city to sign the deal, said the city is "forging ahead in the northern powerhouse''.
"It has the power to change the shape of local government in the region in a way that would have been unthinkable even just a few years ago,'' he added.
"For local people, it will mean the decisions that affect them being taken locally.
"Manchester is not a one-off - far from it. In becoming the second great northern city to sign up to managing its own affairs with this ambitious agreement, Sheffield City Region is playing a vital part in helping to build the northern powerhouse.''