Projects supporting "at risk" young people aged 16 to 25 can bid for funding amounts ranging from £50,000 to £250,000 over the next two years.
The fund will particularly seek to support projects that use physical activity to tackle issues such as crime, unemployment or drug and alcohol abuse.
Mayor Boris Johnson said: "The beauty of sport is its ability to get people together from all backgrounds to join in positive activity. As well as helping young people stay healthy, it can provide immense mental stimulation and as such help tackle issues such as crime, educational underachievement and a lack of community cohesion."
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