The scheme, which is being carried out by E Quinn Civils Ltd, is expected to last approximately nine months.
People living in and around the area are advised that, during this period, there may be some minor delays and disruption.
At certain times, says Derry & Strabane Council, the work may necessitate restrictions on access to the City Cemetery.
Advance notice of alternative access arrangements will be provided on Council’s social media networks.
Plans to extend the cemetery through the construction of 950 additional plots were approved by Council’s Planning Committee in January.
It’s understood the new section - adjacent to Kildrum Gardens in Creggan - will extend the operational life of the City Cemetery for new plot openings by up to seven years.
An associated access road will also be extended from the existing cemetery site and additional parking spaces will be provided along the new road.
Council’s Head of Environment, Conor Canning, said: “These are essential works which will alleviate pressures on space at the City Cemetery while plans for a new cemetery site are progressed. Disruption will be kept to a minimum throughout this process and we appreciate the co-operation of residents in the area, both during the planning stages and over the coming months.
“As part of these works, the contractor has set up the following emergency contact number to report any incidents in relation to the works. Residents can highlight any concerns by contacting 07879414346. Council will provide updates on the work and any additional restrictions or impacts in the surrounding area throughout the project.”
Derry & Strabane Council plans to open a new greenfield cemetery close to the border at Mullennan Road.
It’s understood this will provide 20 years’ worth of burial space for the city.