The new speed limit will join Hay Street, Kent Street, Pitt Street and Castlereagh Street in the CBD to the existing 40km/h zone at The Rocks to the north of the CBD.
The new zone is set to be introduced by the end of the year. The speed limit is a 10km/h reduction on the current 50km/h speed limit in the CBD.
Roads and Freight Minister Duncan Gay said the new speed limit is a response to rising concerns over pedestrian safety. Between 2008 and 2014, 7 pedestrians have been killed in the CBD including 3 just this year.
"More than 90% of trips made every day in the Sydney CBD are made on foot," Minister Gay said.
"The CBD carries an incredibly high volume of traffic on both its roads and footpaths, so it's important that all road users work together to reduce the high number of crashes and injuries”.