Lochaber Housing Association and the council are to redevelop the site of the former Belhaven Ward in Fortwilliam.
The development will comprise of five wheelchair liveable bungalows and a block of eight, one and two bed flats ready for occupation in September 2016.
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The project will be part funded by a Scottish Government Housing Grant, while a partnership between the council and NHS Highland saw the building transferred in October.
The construction contract will be awarded in the next few weeks with works set to commence earlier in 2016.
Social Justice Secretary Alex Neil said: "I am delighted that by releasing this surplus NHS site and keeping it in the public sector for Highland Council to develop affordable housing, it will allow the delivery of much needed new homes in the Fort William area.
"Vacant land and property which was previously in public sector ownership – such as by NHS Scotland and Police Scotland – is being used to add to the provision of affordable housing across Scotland."
(LM/CD)
