A £2m grant was awarded to the school by the Welsh Assembly after a joint initiative between parents, staff and the local authority to provide a regional centre for autism.
The funding, along with Denbighshire's contribution of £250,000, will provide specialist classrooms and facilities on a primary and secondary school campus in Denbigh.
Ninety three pupils aged between three and 19 are currently educated at Ysgol Plas Brondyffryn in Denbigh.
However, in recent years the Victorian building has fallen into disrepair and was in serious need of investment.
Parents have said they are concerned that their children are being taught in a building which was never built as a school.
It is a former country mansion and many classes are held in former dairies.
The students at the school have autistic spectrum disorder, ranging from people with no speech or language through to very gifted youngsters with social difficulties.
Denbighshire council spokeswoman Sioned Bowen welcomed the announcement: "This is excellent news for the children, parents and staff, with the school term ending on a very positive note.
"Parents have worked hard over many years to improve the provision for autistic children."
Vale of Clwyd AM Ann Jones said she was looking forward to seeing the building work begin.
Improve facilities
"I'm delighted, that at long last, the work on Ysgol Plas Brondyffryn is ready to start."
In partnership with the newly formed Plas Brondyffryn Trust, the new development will include high quality residential services, a support unit to meet the needs of autistic children and a centre for professional development.
The new school will be built behind Denbigh High, and will cater for 56 youngsters from across north and mid Wales along with parts of Cheshire.
The location was chosen so pupils of Brondyffryn and Denbigh High School could share IT and technology facilities and involve the pupils further in the community.
The fight to improve facilities at Ysgol Plas Brondyffryn has been going on for more than three years.