Mt. Crawford Prison in Wellington is being brought back into use because of a jump in the national number of inmates.
The hilltop site in the suburb of Miramar was mothballed last June, when the national muster of inmates slumped.
The Corrections Department now says it urgently needs the 120 beds at Mt. Crawford and they will all be in use within a fortnight of the prison's re-commission.
Locals had hoped the department might choose to expand Upper Hutt's Rimutaka Prison instead.
But Corrections says it had no other option.
It says security systems are being tested as part of the prison's re-commission and any fears of residents are groundless.
Enterprise Miramar Peninsula has lobbied for the prison to stay closed permanently and spokesperson Allan Probert says expanding Rimutaka Prison made financial sense.