There are a number of ideas being considered for the new event, including laneway festivals, night markets and music festivals.
The NSW Government will create the event in consultation with businesses, community groups and local government.
Premier Gladys Berejiklian said she is confident that the government will be able to create a world-class event for Western Sydney.
“We want this Western Sydney event to replicate the success of Vivid which has provided entertainment, at the same time as creating jobs and boosting the state’s visitor economy,” Ms Berejiklian said.
Minister for Tourism and Major Events Adam Marshall said the event will attract visitors at a historically quiet time for local hotels, restaurants and businesses.
“We want it to draw visitors from across Sydney, NSW and Australia to the suburbs of Parramatta, Penrith, Liverpool and Campbelltown,” Mr Marshall said.
“Whatever the final event, we want to make sure it takes full advantage of the riverways and parklands across Western Sydney by reinvigorating public spaces with art, music and food.”