The three acres of land for the cemetery has been provided by builders Bellway Homes, as part of a planning deal linked to its Whittle Fields development in the town.
The cemetery is urgently needed, because the town’s main existing cemetery at St Mary’s church in the town centre has only a handful of spaces left.
The cemetery will be at Leaders Farm off Brookfield Way, north-west of the town centre.
New Lutterworth mayor Cllr Tony Hirons said this week: “We have been waiting 30 years for a good site for this cemetery. We are just in the process of getting it all tied up and signing it across from Bellway Homes.
“Then Lutterworth Town Council will take it forward from there.”
Cllr Hirons added that he hoped to raise money to provide a shelter and benches for visitors to the cemetery in his mayoral year. He said he hoped work on the cemetery could start this autumn.
Harborough District Council’s Executive recommended in October last year that a plot of land at Leader’s Farm in Lutterworth should be made available for the cemetery, with the running of the site handed over to Lutterworth Town Council.
Cllr Phil King, portfolio holder for finance, assets and development, said at the time: “There is a need for burial provision in Lutterworth with the availability of plots currently running low, so I am pleased we have been able to work with developers and that a Section 106 agreement could be made to secure this land for the provision of the community.”
As well as providing a new cemetery, Bellway has committed to contributing £16,500 towards bus stop improvements, £17,800 for education and more than £8,000 for library services.
The developer will also pay £86,000 to the county council to fund bus passes.
Homes at Whittle Fields will range from one-bedroom apartments to five-bedroom houses. There will be 39 affordable rented and shared ownership homes.
Sales Director for Bellway East Midlands, Ben Smith, said: “We are thrilled to have started work at Whittle Fields.”
A spokesman added that the cemetery was “very much needed in Lutterworth”.