Whitehorse city council unanimously approved the transfer of three lots next to the Pioneer Cemetery to the Yukon Government at its meeting Monday.
The government plans to build an addition to the Sarah Steele addictions treatment facility on the site.
In 2010, sub-surface scanning in the area uncovered several "sites of interest," which the city said could be graves.
At the meeting, Minister of Health and Social Services Doug Graham urged the mayor and council to approve the land transfer.
"You all know how much such a facility, an expanded facility I might add, is needed in the City of Whitehorse, and we're really looking forward because this is a top priority of my government."
Graham said archeologists will explore the site beforehand and the government will work with First Nations, the city and other stakeholders.
If they do find graves, Graham said they'll try to locate living relatives and a place for re-burial.