Martlets Hall in Burgess Hill is being demolished and turned into a car park, Mid Sussex District Council has announced.
It says the demolition is required to enable the £65million regeneration of the town to proceed to the next stage.
The district council, which owns the building, is organising the demolition, but developer NewRiver will refund the cost as part of the new lease for the site, a spokesman said.
The car park will be temporary until NewRiver needs the site to continue the town centre regeneration project, a spokesman added.
Councillor Jonathan Ash-Edwards, cabinet member for economic growth, said: “The building is now empty and has been stripped internally, with many of the assets reused in other community buildings.
“The works will start as soon as West Sussex County Council is ready to relocate the library to the temporary location at the other end of the site.
“We intend to use the vacant space as a temporary car park until New River needs the site to enable their town centre regeneration project to progress.”