The development will be known as New Lodge and will be located in the garden village of New Earswick.
Work is scheduled to start on site this month to deliver 149 extra care units, comprising one-bed apartments and two-bed apartments and care suites.
The project is due to complete in 2021, and will also see the demolition of Red Lodge, an existing care facility, and the re-location of the multi-use games area that currently sits within the site.
Jo Jamieson, Managing Director, Wates Residential North, said: “As part of our work, we will create opportunities for local people to learn, train and work, ensuring the project leaves a positive legacy.”