Yankee Stadium will host the 2008 All-Star Game before being knocked down and replaced by a new venue next door.
Yankee Stadium reaches its 84th anniversary this year
A new 51,000-seat home for the Yankees, who have won 26 World Series, is due to open in time for the 2009 season.
MLB commissioner Bud Selig said: "Given the Yankees' history and all the events that have taken place in Yankee Stadium, it was the right thing to do."
Yankee Stadium opened in the Bronx in 1923 and was completely remodelled in time for the 1976 season.
The All-Star mid-season exhibition game between the National and American Leagues has taken on added importance in recent years.
The league that wins the game gets home-field advantage for its team in the World Series in October.
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