According to developers Meraas, development has already begun on the project, on a 500,000 sq ft plot of land near to Sheikh Zayed Road, directly opposite Downtown Dubai.
Speaking of the announcement, Abdulla Al Habbai, Group Chairman of Meraas, said: "Dubai Arena will host famous and world-renowned athletes, artists and performers and attract tourists to Dubai all year round. It will also host large global events and performances that have not visited the region as yet, due to the lack of a suitable platform for holding similar events."
Once complete, events at the venue will be managed by the same team behind iconic locations around the world, like The O2 in London, the Staples Centre in Los Angeles, the Mercedes Benz Arena in Shanghai and Qudos Bank Arena in Sydney.
The news comes six months after details of a new state-of-the-art football stadium were announced.
The 60,000-capacity arena will be capable of holding international sports events like athletic meetings and football tournaments, and will be named after His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai.
Set to be built in Al Aweer - behind Mushrif Park - the project will cost around Dhs3 billion and is the first of a nine-point plan to revolutionise how sport is performed, trained for and delivered in Dubai.
The designs show a unique and brilliant structure that appears raised off the ground, forming a perfect half-ball shape.