The former depot was derelict for six years, before being destroyed by fire in 2017.
The modular housing company is set to deliver 140 two-, three- and four-bedroom homes on the site.
It aims to submit a full planning application for the affordable-led scheme by the end of the month.
The homes will be manufactured at ilke Homes’ 250,000 sq ft factory in Knaresborough, North Yorkshire, before being delivered to Rolleston Drive.
This is Ilke Homes’ third scheme in Nottinghamshire – in July, the company signed a deal with Network Rail to build 40 homes in Beeston.
Prior to this, the modular housing firm delivered nine zero-carbon homes in Newark for SME developer, Positive Homes.
This is said to be the first time that Nottinghamshire County Council has released land for a factory-built housing development.
The regeneration project in Arnold is part of the council’s strategy to deliver new homes, stimulate the local economy, and generate receipts from unused sites.
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Last year, the local authority announced it was supporting major infrastructure and capital projects costing over £200m to help boost prosperity for its residents and the local economy.
The council secured an £11m grant from Homes England to prepare eight redundant sites that it owns for housing development.
Tom Heathcote, executive director of development at Ilke Homes, said the company was delighted to have been selected by Nottingham County Council to unlock the brownfield site.
“Our housing technology means we can quickly deliver a high-quality scheme that brings this derelict site back into productive use and deliver much needed, sustainable family homes for the local community."
Councillor Kay Cutts, leader of Nottingham County Council, said: “We selected Ilke Homes as the purchaser for this site after receiving many bids from different housebuilders and developers during the tender process.
“The re-use of this site for housing will be a huge benefit to the community, and Ilke Homes already appear to be making progress with their planning application."