The project, valued at £200m, will see a 350-bed complex built to replace the existing Dumfries and Galloway Royal Infirmary. The facility will also include 104 staff residencies, a helipad and up to 1,000 parking spaces.
In June, the Scottish Government approved an outline business case for the development. At the time, NHS Dumfries and Galloway Chief Executive, Jeff Ace, said he was "delighted by the approval.
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Health Secretary Alex Neil added: "More sustainable, high quality and continually improving health services as close to home as possible is what the people of Scotland want, and that is something this government is determined to give them.
"Giving the go-ahead for development of this new hospital clearly sets out the strength of our commitment to the NHS in Scotland, and will mean that we can provide more sustainable, high quality and continually improving health care services in NHS Dumfries and Galloway and across the country."
A farmland site off the Garroch roundabout at the western end of the Dumfries by-pass has been earmarked for the development. It is hoped work can begin on site in 2015 with the new hospital opening three years later.
It is understood NHS Dumfries and Galloway has set up a project board which will draw up a shortlist of three contractors.
(JP/MH)
