The development includes £7.25 million through the NI Investment Fund and £1.75 million from Invest Northern Ireland.
The Ministers were joined by developers Cecil Doherty and Liam Tourish to cut the first sod as works get underway.
The project will transform five buildings on the Ebrington site, including the Clock Tower, into a 152-bed four star hotel with spa and leisure facilities. Work is expected to be completed by summer 2023.
First Minister Paul Givan said: "As work begins on the Ebrington Hotel, I'm pleased to mark another step forward, not just for the Ebrington site, but for Londonderry itself. It continues to grow as a vibrant, modern city which is looking to the future with confidence – and there is a real sense of that optimism here today.
"Londonderry is a place to work, a place to invest, a place to study and a place of leisure. It is a destination regionally and nationally, and – perhaps most importantly – on the global map.
"Of course, all this takes a collective effort. It involves the Northern Ireland Executive and local government, together with businesses and a range of stakeholders across the community. I applaud the developers of the Ebrington Hotel for their investment in the city, and indeed everyone playing a role in creating a better tomorrow. While acknowledging the financial investment, it's important to recognise the individuals and organisations which have contributed in so many ways with their time, creativity and energy.
"Alongside the Ebrington Hotel, we saw the development of Grade A office space and a hub for start-up businesses. As today's ideas become tomorrow's opportunities, I will be watching with interest as potential turns into reality for Londonderry."
Deputy First Minister Michelle O'Neill said: "The commencement of construction on the Ebrington Hotel is a milestone day for Derry. This major investment will create jobs both during the construction phase, and after the hotel has opened. We have made great progress in the development of the Ebrington site and, together with the Grade A Office space due to be completed soon, this new hotel will bring a renewed vibrancy and a real boost to the regional economy. I offer my congratulations to the developers and all who have played a part in getting us to this point.
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"This latest good news story marks another step forward in our vision to regenerate the North West region. We are building on the opportunities created by investments such as the £250million Derry and Strabane City Deal, the new Graduate Entry Medical School at Magee, and the transformative projects taking place as part of our Urban Villages initiative.
"We want to create prosperity for all the people in this area and I very much look forward to seeing the economic and community benefits delivered for all."
The £100 million Investment Fund, established by the Department of Finance and the Strategic Investment Board and managed by CBRE, is providing loan funding to support the development.
Finance Minister Conor Murphy said: "I'm pleased the Investment Fund established by my Department has been able to support this project with a £7.25 million loan. This project will further develop Ebrington and create jobs in the North West."
Economy Minister Gordon Lyons said: "We continue to see growth in tourism, both leisure and business, across Northern Ireland. The development of quality hotels is important to ensuring we are able to meet growing demand and I am glad that Invest NI has been able to support this project to build a new four-star hotel.
"As well as strengthening the tourism infrastructure in the area, this project will also support the creation of new jobs, and is expected to lead to 80 new full-time equivalent jobs once the hotel opens. This will contribute over £2m into the local economy through annual salaries."
Hotel Developer Cecil Doherty said: "Ebrington Leisure Holdings Ltd is delighted to announce progression to construction phase on The Ebrington Hotel & Spa.
"Our objective is to create and develop a 4 star Hotel to cater for the ever increasing popularity of our City as a must visit, exciting tourist destination.
"The Hotel is set to open in June 2023. We are excited for its future specifically and the Ebrington site overall with our creation of 120 jobs locally along with the unique opportunity to repurpose and revitalise iconic historically significant buildings. Ebrington's future is very bright.
"The Company acknowledges and is deeply appreciate of the significant financial support from Invest NI along with the wholehearted professional support from TEO/SIB, our own design team and all related statutory bodies who have collectively worked to make this happen.
"We look forward to showcasing our vision to the public in 2023."
Herbin Duffield, Associate Director, Investment Advisory, CBRE commented: "This is a significant loan as it represents the first development the Fund has supported in Derry/Londonderry. The project will provide vital employment opportunities in the area and aligns with the Fund's long-term objectives to invest in the sustainable transformation of Northern Ireland."
During their visit to Ebrington, the First Minister and deputy First Minister also officially opened AMP, a new and exciting start-up business hub located on the site.
AMP make available office and desk space for start-up companies and provide professional business development advice and guidance along with business coaching and mentoring services.
The Ministers welcomed the contribution AMP is making to the Ebrington site and congratulated the team for their vision to help other businesses grow.
Ryan Williams, director in AMP said: "We are delighted that the Ministers formally opened the AMP today as Derry's first privately funded growth incubator. We believe the project represents a new ecology for Tech entrepreneurs in the city. The project reflects superb partnership working with The Executive Office and we're delighted to report the building is 95% occupied with some of the fastest growing businesses in NI."
