It will be located on 17th Street and Sixth Avenue and will accommodate more than 560 students.
Parents have long complained about overcrowding in the area's schools due to a jump in residential development.
Mayor Michael Bloomberg and Schools Chancellor Joel Klein announced that the longtime Greenwich Village headquarters of New York Foundling would be transformed into the elementary school.
The new school will reportedly occupy the lower six floors of the building, while New York Foundling will maintain offices in the upper floors.
New York Foundling will use the proceeds from the sale to build a new home in Yonkers for its world-renowned pediatric center, which treats more than 130 of New York City's neediest children.
Additional funds will be used to reduce the caseloads of its social workers caring for children in foster care and to serve as a down payment for the construction of New York Foundling's new charter school in the Mott Haven neighborhood of the Bronx.
