It is one of three major upgrades planned for the resort over spring and summer, totalling $3.65 million.
Queenstown Lakes District Council project manager Steve Hewland said the Lake Esplanade upgrade was "significant" in terms of safety and amenity from the Steamer Wharf to the Fernhill roundabout.
Although a large part of the infrastructure upgrade - the sewer main - was completed last year, the council planned to complete all remaining upgrades "in one hit".
Sections of the water main would be replaced, along with valves, laterals, flow meters and new street lights.
"We have taken a really forward-looking approach.
"In other words we want to minimise the disruption by ensuring that all work that needs to happen on that stretch of road is packaged into this one final project," he said.
The roading project included a new road surface, new kerb and channel, stormwater drainage, improved safety for cyclists, improvements to the pedestrian crossing and improved pedestrian access to the St Omer reserve.
Work would be suspended during the Christmas period - from December 17 to Waitangi Day.
Mr Hewland said an alternative, temporary water main would be introduced while the upgrade was being carried out to minimise disruption to the many accommodation providers in the area, which would prevent "anything more than minor water shut-downs".
The project would be done in stages and, at minimum, one-lane traffic would be maintained.
Meanwhile, two major utilities and roading projects on Gorge Rd, valued at $1.6 million, would also get under way in spring, with work taking place from Shotover St to Industrial Pl.
That was also an upgrade of street lighting, water and sewerage and some "significant improvements" to road-user safety, Mr Hewland said.
The work included. - A new pedestrian refuge at the Robins Rd intersection.
New bus stop opposite Wakatipu High School.
New lane markings.
New intersection controls for Hylton Pl and Hallenstein St.
Landscaping.
Work on Gorge Rd would also stop over the busy Christmas period.
The utilities project would be completed before Christmas and the roading project after Waitangi weekend.
A three-month upgrade of Perkins Rd, valued at $500,000, improving stormwater drainage, widening the carriageway and installing new parking bays was also scheduled to begin in September, he said.
