Castletown Police Station will be handed over to the Manx Museum and National Trust.
The Department of Home Affairs and Treasury has agreed to move the building into the ownership of the Trust.
The package involves the use of proceeds arising from the sale of the surplus office accommodation in the name of the Trust – and a contribution of up to £100,000 from charitable funds.
After the transfer has taken place the Manx Museum and National Trust will consult with local stakeholders, businesses and government agencies about the building’s future use.
In the past 30 years numerous buildings have been transferred in this way – they include Castle Rushen, Laxey Wheel, Peel Castle and the Old House of Keys.