Accompanied by US vice president Joe Biden, New York governor Andrew Cuomo announced a sweeping set of infrastructure renovations, with a new LaGuardia Airport as the centrepiece.
Calling the existing facility built in 1939 "un-New York", Cuomo said the plan was not to renovate the old airport but to replace it.
"LaGuardia is slow. It's dated," he said. "It is a terrible front door entrance way to New York. It is a lost opportunity. It is almost universally decried as a poor representation of an airport, let alone a New York airport.
"You talk to people who went through LaGuardia, you hear all sorts of things. I actually heard someone say that if he were blindfolded, and he landed in LaGuardia, he would've thought he was in a third world nation."
The first phase of the project will cost $4bn (£2.57bn, €3.6m), half of which will come from private funds and will generate 8,000 construction-related new jobs, said Cuomo.
The new facility will be a single terminal, which will be sited 600ft closer to the Grand Central Parkway. That will increase the space available for flight operations and reduce gate delays.
In addition, the new facility will be connected to ferry and rail services. The new terminal will have three times the security screening space along with increased concession and retail space.
"It's the greatest city in the world and it requires a 21st century infrastructure," said Biden.
Biden hailed the project as an example of the federal government cutting red tape to speed up the process of designing and approving the new facility.
Last February, Biden criticized LaGuardia Airport, calling it a "third world country".
Construction is set to begin in August with new facilities opening in 39 months, and the completed project 18 months after that.