Tees, Esk and Wear Valleys NHS Foundation Trust will phase the improvement work at West Lane Hospital over four years and share the packages among its four nominated contractors.
The mix of refurbishment and new build will start with a £10m work package followed by a further £15m set of improvements.
Plans include a new 12-bed unit for young people who need to be cared for in a low secure environment.
There will also be extensive refurbishment and redesign of existing premises to provide much improved accommodation for inpatient assessment and treatment services.
And the final stage of the project is to further improve and expand the 12 bedded eating disorders inpatient unit, adding two additional bedrooms and extending the indoor and outdoor living space.