The Stanford 20/20, held in 2006 and 2008, kick-started Caribbean interest in the shortest form of the game but since the collapse of the Texan's financial empire, leading to his imprisonment for fraud, there has been a lack of resources for players.
The West Indies were crowned Twenty20 world champions this year and the West Indies Cricket Board has run a lower-key regional tournament to keep top players involved in the shortest format.
But the new league promises to give Caribbean cricket a much needed financial boost too.
The WICB said their agreement with Barbados and New York based merchant bank Verus International would ensure annual funding for new retainer contracts for regional players, above and beyond the 20 main squad members who are contracted.
"This will bring a host of benefits to players and West Indies Cricket in general," WICB president Julian Hunte said.
"A significant number of players at the regional level will benefit through greater financial stability both from playing in the league and from year-round retainer contracts while having an international platform on which to showcase their skills and talent.
"Most importantly is that the league will bring a huge financial injection into the Caribbean and create significant job opportunities across the region in a wide cross section of sectors."
The competition is expected to comprise up to six privately owned city-based teams. No details were immediately available on how those franchises would be created or any potential owners.
Ajmal Khan, chairman and CEO of Verus said there was huge potential for the league.
"We believe that the recently won World Twenty20 is a testament to the quality and excitement of West Indies cricket," he said.
"We intend to utilise the Twenty20 league to further develop and strengthen West Indies cricket by expanding the global fan base as well as the number of West Indian cricketers under regional retainer contracts".