"The municipality is taking the choice of freeing public space in Grenoble from advertising to develop areas for public expression," the office of Eric Piolle, of the French Greens, said.
Between January and April, 326 advertising signs, including 64 billboards, will be taken down and the city's outdoor advertising contract will be cancelled.
In place of the hoardings, "about 50 young trees will be planted before spring", the mayor's office said.
Starting in January, officials will offer local cultural and social groups free advertising space. The new signs will be smaller and aimed "not only at drivers, but also pedestrians", said Lucille Lheureux, deputy in charge of public spaces for the city.
The local environmental group "Paysages de France" hailed an "important symbolic victory".
There is a dispute over how much the greening of Grenoble's streets and cancelling of the old advertising contract will cost the city.
The mayor's office said the city used to pull in €600,000 a year selling advertising space, but that this figure had been expected to drop to €150,000 in the new year due the wider slump in advertising rates.
The question is how long can Piolle stick to his plan. In 2007 the Brazilian city Sao Paulo also banned street ads, but two years ago authorities overturned the ban and once again opened up its streets for billboard advertising.
Last year Grenoble was voted the best city in France to be a student and Forbes magazine ranked it fifth in the rankings for the most innovative cities in the world.