Kirkconnell Correctional Centre will reopen its doors to 260 inmates in June, three years after it was closed by the state government.
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Member for Bathurst Paul Toole made the announcement that $4 million would be spent on infrastructure work at the minimum security prison.
The reopening will result in the creation of 60 jobs.
Mr Toole said the decision is the result of an increase in inmate numbers across the state.
Work will be carried out on infrastructure over the next 16 weeks to ensure the facility is fully operational by the end of June.
Listen to Mr Toole talk about the reopening of Kirkconnell Correctional Centre: