The 50-acre riverside development on the edge of Abbottabad will include restaurants, a heritage centre and artificial waterfalls.
The government of Khyber Pakhtunkhwa hopes the project, announced as a public-private partnership, will boost tourism but denied it was intended to improve the town's image after the humiliation of the bin Laden raid.
"The amusement city will be built on 50 acres in the first phase but later will be extended to 500 acres," Syed Aqil Shah, the provincial minister for tourism and sports, told AFP.
"It will have a heritage park, wildlife zoo, food street, adventure and paragliding clubs, waterfalls and jogging tracks."
Work is due to begin in late February or early March, he said, and will take eight years to complete. Funds worth three billion rupees have been allocated, he said.
Abbottabad, a quiet, leafy town nestling in the foothills of the Himalayas around 50 kilometres north of Islamabad, has long been a popular spot for well-heeled families from the capital to spend weekends away.
Al Qaeda chief Osama bin Laden was killed by US special forces in the town on May 2, 2011.
The town also houses Pakistan's elite military academy and the discovery of the world's most wanted man on its doorstep prompted allegations of incompetence.
But Shah insisted the new development, to be named, was simply about promoting tourism, not polishing the town's tarnished image.
"This project has nothing to do with Osama bin Laden," he told AFP.
"We are working to promote tourism and amusement facilities in the whole province and this project is one of those facilities."
The authorities demolished the compound where bin Laden hid with his wives and children last February, fearing it could become a shrine to al Qaeda followers.
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I think those obsessed with the irrational demand of Hazara sooba are disturbed with this project (which is among the many this KP govt has launched in Hazara) as they fear this would soften sentiments agaainst KP govt. The fact is that Hazara is the demand of a few selfish leaders who falsely believe they represent the voice of the whole region; which they do not and cannot. Just as Haroon Hazara (in the above post) is promoting ethnic division,the Hazara movement wants to create ethnic rift in the region.
Ethnically and linguistically the case for hazara province is very weak as pakhtuns are in majority. Kohistan, battagram, Torghar, most of mansehra and sigificant parts of haripur r pakhtuns. administratively, the slogan to which baba haider turned later on, there is no logic to carve out a couple of districts from the smallest province of pakistan, when bigger province like sind and baluchistan r ok being one. As regards the slogan of deprivation of hazara, chief ministers in the past have mostly been from hazara, and the develpment projects which the current kp govt has undertaken in hazara cannot be matched by those of even Hazarwal chief ministers. Finally, demand for referundum is unlawful. There is a constitutional way of making soob; if that is followed, KPK govt has no objection to it.
Will there be a simulated chinnok ride and a scary tour of a haunted house!
You have already demolished the biggest potential tourist attraction.