The current hospice on Nettleham Road will be closed down once everything is transferred over.
St Barnabas Hospice plans to open a new centre in Lincoln.
The 2.5 acre land cost the charity and end-of-life care service £1.8 million, and is near to Lincoln County Hospital on St Anne’s Road.
The new hospice will be built over the next few years and will incorporate a number of facilities and new medical technology.
The building will cost a further £5-6 million to erect.
The hospice would be complete in several years and the trust needs to raise money for the centre to be built.
Chief Executive, Sarah-Jane Mills said: “This is an exciting concept for St Barnabas and an opportunity which we had to seize.
“It paves the way for us to accelerate our plans for the future, investing several millions of pounds in the creation of a centre of excellence to take palliative care into a modern new era.
“The location is ideal as we are increasingly working in partnership with the local NHS to ensure Lincolnshire stays at the national forefront of palliative and end-of-life care.”
Mike Speakman, Director of Facilities at ULHT said: “We are delighted that this surplus land is to be put to such good use and for the benefit of the hospice’s patients and their families.
“The agreement is a natural step forward for both of us, and creates a strong platform for us to work together to harness the latest clinical innovations in caring for people with life-limiting illnesses.”