Once a favourite hot spot for music lovers, the pub, which is situated behind the Grade II* listed Roundhouse, is owned by the charity Canal & River Trust.
It has stood empty for ten years but is set to be revived as a canalside bar and restaurant.
The pub was once a thriving jazz and blues venue but complaints over noise from residents of new flats nearby saw it shut down.
The Canal & River Trust has leased the building to Sherborne Wharf.
MJS construction are now in the process of turning the waterway building into a newly refurbished restaurant and pub.
Once complete, it will include four bars and a new eating area, as well as a private function and dining room. During the summer, diners will be able to enjoy eating alfresco while watching the boats navigate the canals.
Sherborne Wharf is also relocating its boating facilities to the Fiddle & Bone site and will provide new boating facilities including a chandlery, pump out, diesel and laundry facilities.
Peter Mathews, who chairs the Canal & River Trust’s West Midlands partnership, said: “It’s fantastic that this waterway gem is now being renovated and turned into what will be a fabulous restaurant and pub right in the heart of the city’s famous canal network.”
Earle Wightman, managing director of Sherborne Wharf, said: “We are thrilled we have the opportunity to transform this derelict building into a bright modern eatery and look forward to it being a hive of activity and a real focal point for the local community.”
The new restaurant and bar is due to be reopened in early February 2015.