The terminal has been vacant since December 2000, when the airport's new international terminal opened.
The airport originally planned to renovate terminal two in the fall of 2001 to handle domestic flights, but the project was delayed indefinitely after the drop in air travel following the September 11th terror attacks.
Now, thanks to a 22 percent increase in air traffic over the past five years and the addition of several new air carriers, airport officials have decided to go ahead with the long-delayed project.
"And that growth is really driven by Virgin America and Southwest and Jet Blue that all started operations in the last year; very strong growth by those carriers. Virgin America will be the primary tenant of terminal two," said SFO director John Martin.
The new terminal two will have 14 gates. The $383 million project will begin in the next few weeks and is set to be finished in late 2010.