The new area will include space for growing flowers and vegetables, sitting and exercising, as well as a skills shed.
The garden will be mainly for service users in an inpatient setting, but is also designed to be beneficial for staff.
It will be used for activity and educational groups, as well as exercise therapy.
Work has begun to prepare the ground at the site run by CNTW, a provider of mental health and disability services in the North East and north Cumbria.
A combination of staff and service users will be transforming the area.
Specialist occupational therapist and vocational lead Jon Robson, who has been leading on the project, said: “We want to make the area accessible for everyone and a comfortable, relaxing place to be.
“An acute ward can sometimes be a loud and distressing environment and the Occupational Therapy peace garden is designed to promote well-being and recovery.
“The garden will provide service users and staff alike with an opportunity to take a break and spend time away from the ward environment.”