The $150 million project, to be completed by the fall of 2007, will boost the Art Gallery of Ontario's space for art by some 40 percent.
Gehry, best known for the wave-like titanium Guggenheim Museum in Bilbao, Spain, was born in Toronto and grew up just blocks from the downtown location of the AGO, the eighth largest art gallery in North America.
His new design will transform the existing building into a complicated structure that includes a long titanium and glass facade and an asymmetrical baroque staircase, visible from outside, that winds through a glass column toward two new contemporary art displays.
Gehry said he chose titanium because it will glow golden on a dull Toronto winter day.
"The most important part of the design is how it reflects and rebuilds this institution," he said. "From the outside, the main idea was to make the building more inviting."
City officials hope the renovation, and the fact it is BEING designed by such a famous name, will boost tourism in Toronto, Canada's largest city.
Gallery director and chief executive Matthew Teitelbaum said the Guggenheim Museum, which transformed a small Spanish industrial town into a tourist destination, was a determining factor in the decision to involve Gehry in the project.
"There was something about the Guggenheim Bilbao in terms of how it functioned internally and the way it allowed you to move from one space to another, the way light was introduced and the way you could see galleries from a distance that convinced me that Frank was the perfect person to work on the AGO," Teitelbaum said.
Toronto's Royal Ontario Museum has already started work on a crystalline extension designed by Daniel Libeskind, who is also designing the complex that will go up on the site of the World Trade Center in New York.