The landscape design practices must draw up proposals for giving the city's Winckley Square a fresh new look, taking into consideration its Conservation Area status.
The winning design must cater for a number of activities such as outdoor events, and could include an eye-catching feature that will attract visitors from nearby Fishergate Shopping Centre. Imaginative public artwork will form part of the design, and improved lighting and drainage must be included.
Landscape Institute president Nigel Thorne said: "Landscape architects are specialists in the transformation of public spaces, with all the different demands placed on them.
"A key goal is creating a sense of place and through that bringing meaning and value to the spaces that communities share.
"The renovation of Winckley Square, through our competition, will create an outstanding location right at the heart of Preston city centre."
The designs will be considered by a judging panel from the Preston Vision Board, Preston City Council, the Northwest Regional Development Agency and CABE.
The winner will be announced in March.