The ten-year economic growth plans involves a £135 million Scottish Government investment into the city's infrastructure.
In addition, the UK Government will commit up to £53m while the Highland Council and regional partners will contribute £127m towards the agreement.
Funding will be targeted towards improving the regions transport and digital connectivity networks, fostering innovation of high growth businesses through the creation of a Northern Scotland Innovation Hub, promoting tourism and delivery of local housing and assisted living schemes.
Key features of the deal include:
• Significant investment in the trunk road network to deliver the strategic A9/96 Link Road improvement and grade separation of the Longman interchange to improve congestion and accessibility to Inverness.
• The delivery of substantial investment in Inverness Castle to support local tourism and the regional economy.
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• Investment to deliver 6,000 new houses over 20 years of which, 1,800 are to be affordable homes.
• Support the commercialisation of new medical products and technologies at the new multi-disciplinary centre for clinical research and teaching on the UHI campus.
Scottish Infrastructure Secretary Keith Brown said the City Deal announcement demonstrates a "clear and strong" commitment to Inverness and the wider Highland region.
"This deal provides an opportunity to enhance and accelerate the delivery of long-term aspirations held by the Scottish Government and The Highland Council, the impact of which could help increase the population, create thousands of jobs and help to up-skill the local labour market," he said.
"The significant investment in Inverness's transport infrastructure will support much needed improvements to the trunk road network, including infrastructure improvements on the A9/96 Link Road and the Longman interchange. This investment will improve access to and within the local communities and at the same time improve accessibility to jobs, education and healthcare including the University of the Highlands and Islands and development along the A96 corridor.
"The Deal will also support the transition of Inverness Castle into a world class visitor attraction to boost regional tourism and furthering growth in an important sector. Through the deal, we will identify and explore ways to extend digital coverage, including Superfast Broadband and Mobile 4G connectivity across the region to support the The Highland Council's ambition to be the most digitally connected rural region in Europe."
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