Whanganui trust Tupoho Whanau signed a deed with the city council on Friday, which paves the way for a new resource recovery centre to be built on the site of the city's old prison.
The council agreed in July to replace its existing centre and build a more modern one on land which the local iwi now owns.
The trust which includes representatives from both the council and Te Runanga o Tupoho, will operate the facility.
Once the recovery centre is completed in the middle of next year, it will offer residents a range of re-cycling services including green waste,
There's also a plan to set up a second-hand shop on the site.