The area surrounding the TT Grandstand is to be turned into a motorhome site during non-racing periods.
Douglas City Council say residents and visitors will be able to park and sleep in motorhomes and campervans on the new site in Noble's Park.
Anyone staying will need to buy a pay and display ticket from the machine on site.
The tariff will be £10 per 24-hour period for a maximum permitted stay of four consecutive nights.
Vehicles and awnings will not be allowed to stay for long periods of time, and the facility will be unavailable during the TT and the Manx Grand Prix.
Facilities will include drinking water and a chemical toilet emptying point.
The Council is also exploring options for potential electrical hook up points and grey water disposal.
Councillor Andrew Bentley, chair of the Regeneration and Community Committee, said: "These measures represent a significant step forward in providing facilities for motorhomes in the capital and promoting the Isle of Man as a welcoming destination for all visitors.
"Douglas City Council is committed to ensuring that Noble's Park remains an attractive and accessible location for all, and these improvements are a testament to that commitment.
"The provision of overnight motorhome and campervan parking fits with the leisure and recreational ethos of the park.
"Set in the picturesque surroundings of Noble's Park, visitors can enjoy a sea view and the tranquillity of the park while still having easy access to the city's amenities and attractions.
"With good public transport links and the seafront just a 15-minute walk away, Noble's Park is the perfect base for exploring the Isle of Man."
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