The news was announced at a meeting of the town commissioners earlier this week.
The closure is due to take place between 29 April and 6 September.
It comes after a public survey which showed 65% of respondents supported the idea of creating an open space in the town centre.
MHK for the area, Jason Moorhouse has called it a "momentous decision" but added that local traders are concerned it could impact business.
He added: "The more we can do to make this plan work and to support local businesses, the better it will be for everyone".
Power station chimney flue arrives this week
Peel sewage works hits milestone
MHK to query gas buying for power generation
Yoga studio applies for sign permission
Yacht club worries over lifeboat retirement
One nuisance cyclist ticketed in more than three years
Huge floating book fair to arrive in Douglas next month
