Nexus will continue to own all trains on the network
The government has approved a £580m grant to modernise the Tyne and Wear Metro network.
Up to £350m will be spent on modernising stations, installing new escalators, renewing track and refurbishing rolling stock.
The remainder will pay for maintenance and running costs until 2019.
Last year, Germany's DB Regio was chosen to operate trains and the network's 60 stations on behalf of Metro owner Nexus from 1 April.
David Wood, chairman of the Tyne and Wear Integrated Transport Authority, said: "This is an unprecedented funding boost for Metro secured at a time when public spending in general is under real pressure.
"Metro is vital to the economy and social life of north-east England and has a crucial role to play as our region emerges from recession."
Nick Brown, Minister for the north-east, added: "Today's announcement safeguards the future of the Tyne and Wear Metro for a generation.
"The Metro is the envy of other cities and the government's commitment reflects the importance of the Metro to our region."
Nexus was told to hive off parts of the publicly-funded network in return for the government's investment.
Bernard Garner, director general of Nexus, said: "We have satisfied challenging government conditions in order to secure this funding and with it the future of Metro.
"Our ambitious modernisation plans will deliver real improvements passengers will notice on their day-to-day journeys."
Nexus will continue to own all trains, set fares and co-ordinate improvements.