The housing will be developed on Queens Street by the Dumfries and Galloway Housing Partnership and will be the first of their kind in Scotland.
Council Leader Ronnie Nicholson said the scheme forms the final piece of regeneration work in the Queen Street area.
"The development will transform a piece of derelict land into high performing homes for families in need of housing and builds on the investment made in new street lighting, the bringing of empty properties back into use, grants to households for new railings and garden walls, the resurfacing of the roads and pavements and design improvements to reduce speeding traffic," he said.
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"These improvements have really transformed this part of our town centre."
Chair of the Housing Committee Craig Peacock said: "These new affordable homes in Dumfries town centre were agreed by the Council's Housing Sub Committee and follow on from the new homes from Loreburn recently further down Queen Street. They are designed to blend with the local Victorian architecture but will contain some very modern ground breaking features including high standards of energy efficiency, accessibility for people with disabilities, home office space and will maximise the use of natural light.
"Our council are committed to bring life back to our town centres and developments such as this will help sustain a vibrant and economic future for our towns."
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