The decision is part of a NSW government bid to revive the area's night-time economy, which was hit hard by the pandemic.
The government has appointed a 24-Hour Economy Commissioner to lead efforts to unlock the city's cultural and economic potential.
The laws shutting down drinks venues from 1.30am were removed from venues in the CBD in January last year but had remained in Kings Cross.
From March 8 alcohol can be served in the Cross until 3.30am, giving patrons an extra two hours of drinking and entertainment.
Restrictions on particular drinks, shots, cut-price cocktails and glass tumblers after midnight will also go, as will the requirement for responsible service of alcohol marshals and CCTV surveillance.
The laws were introduced in 2014 after community outrage over the death of 18-year-old Thomas Kelly, who was killed in a one-punch attack as he walked along a Kings Cross street.
Premier Gladys Berejiklian said the changes would boost jobs and revitalise the once-infamous precinct.
"Kings Cross has transformed considerably since these laws were introduced over six years ago," she told The Sydney Morning Herald on Tuesday.
"The precinct is now well-positioned to continue to evolve into a vibrant lifestyle and cultural destination with a diverse mix of small bars, live music venues and restaurants."
Minister for Jobs, Investment, Tourism and Western Sydney Stuart Ayres said there was an opportunity to bring Sydney back better than ever after the pandemic hit the tourism, hospitality and arts sectors hard.
The government will work with council and industry to "identify and activate unique and thriving economic hubs across Sydney" under the new strategy, he said.
"It will result in a network of activated 24-hour Economy hubs across Sydney – each offering a distinct experience, and well connected by efficient transport options."
New 24-Hour Economy Commissioner Michael Rodrigues will lead the strategy with the aim of making Sydney the best place to live, work and play.
Mr Rodrigues is currently chair of the Night-Time Industries Association, an industry group promoting Sydney's nightlife, and managing director of cultural media outlet Time Out Australia.
"I'm excited about the upcoming opportunities and to champion the 24-Hour Economy strategy as we deliver a nightlife that will sit alongside New York, London and Tokyo," he said in a statement.
Independent MP for Sydney Alex Greenwich, whose electorate includes Kings Cross, welcomed the end of the lockout laws.
"Harmonising the licensing conditions with the rest of the Sydney CBD and Oxford Street is long overdue and will bring hope to businesses who have been doing it tough," he said in a statement.
Global cities don't tell people when to go to sleep, they help them have a fun and safe night.
Much had changed since 2014 when the lockouts were first introduced, he added.
"The 24-hour beer barns are gone, and a more sophisticated dining, small bar, and entertainment offering is ready to thrive," he said.
"Kings Cross is well-placed to have a safe and vibrant future."