Council bosses have splashed the cash to acquire the keys to Northallerton’s former prison.
The HM Prison Northallerton site, which was closed by the Ministry of Justice in 2013, was sold to Hambleton District Council in a deal worth £1.4m last week.
Council chiefs say the acquisition of the 3.4 acre prison is part of a plan to “regenerate” Northallerton’s town centre.
Leader of the council, Coun Mark Robson, said: “This is a very exciting project for the district council – and for Northallerton,
“Finally securing the building is the first step towards the regeneration of the town centre.”
Coun Robson said the cash to pay for the prison will be funded from the authority’s Economic Development Fund.
He said money received through the site’s redevelopment would be “ploughed back into this fund”.
The former prison was initially used as the North Riding of Yorkshire’s county jail when it opened in the 18th century.
During its 230-year history, the building also served as a military and training prison for adults and finally as a male young offender’s institution.
It’s based in the town centre and has five buildings including two female wings, built in the 19th century, and the governor’s block.
A Ministry of Justice spokesperson said: “We have completed the sale of the former prison at Northallerton to the council as part of our plan to provide a fit-for-purpose, modern prison estate that provides the best value for the taxpayer.”