Almost every building at a former mental hospital has been shut before a new facility opens onsite with a new name.
The number of patients resident at Gransha has dropped dramatically from 600 people in the 1960s to just 14 today.
Health chiefs said this was due to an overhaul of services over the decades and a focus on care in the community.
The new £11.5m unit is part of major plans to transform mental health provision by the Western Health Trust. Trevor Millar, director of mental health at the Western Trust, said most of the villas which would have housed patients were now closed.
Mr Millar said: “We are in the process of building a brand new hospital to replace Gransha hospital on the site.”
Derry SDLP Councillor Shaun Gallagher told Mr Millar: “Gransha was without a doubt an institution designed to make people ill in my opinion. I can’t thank you enough and I think what you are doing is fantastic.”
UUP Councillor Mary Hamilton said that when you visited someone in Gransha “you left and walked away and you were nearly depressed yourself”.
She also said that there was a stigma to the name Gransha in the North West.
Mr Millar said that the name would be dropped from the new facility, with patients deciding on its new title.