The Shore Health Services Board of Directors voted to build the new facility between Keller and Parksley, while maintaining "significant outpatient, diagnostic and physician services" in Northampton, according to a prepared statement from the hospital.
The Riverside Health System Board of Directors approved the local board's decision.
Officials were not specific about exactly where the new hospital would be located within the territory proposed.
"RHS is proud to endorse the local board's decision. We are excited to support the board in expanding the availability of health care services for all Eastern Shore residents from the bridge-tunnel to the state line," said Bill Downey, Riverside Health System chief operating officer.
The new hospital will replace the existing structure in Nassawadox, which was built in 1971.
"I would look at it as a good sign," Onancock Mayor Bruce Paone said of the announcement, which came midday Thursday.
Onancock's Town Council recently appointed a committee to pursue the hospital's relocation. The town also sent a letter to Riverside Chief Executive Officer Richard J. Pearce inviting him to tour its new water and sewer facilities, which could have been a major selling point in the consideration of where to build the new hospital.
Northampton County Supervisor Spencer Murray, who has been an outspoken proponent of keeping the hospital in Nassawadox, also reacted to the announcement, saying, "Obviously, I'm very disappointed that they have decided to move north, but I don't blame our neighbors to the north for wanting the hospital."
Northampton County was to release an official statement about the announcement later Thursday.
"We have researched and evaluated our options for several months in our strategic planning and board meetings," said SHS board Chairwoman Caramine Kellam. "We sought the opinions of many stakeholders, including physicians and other health care providers and individuals from all areas of the Shore. All perspectives were systematically aired, discussed and genuinely considered."
Hospital inpatient and directly related support services will move north "to an as yet undetermined location," the statement said, while the Nassawadox location likely will include an express care center with extended hours.
The release also said that by the end of this year, $3 million in improvements to the Nassawadox site will be made, including an upgraded CT scanner and digital mammography and digital archiving systems.