The 139 bed Todd River Facility at the Mercure Hotel will cease operations on May 11.
Health Minister Natasha Fyles said the decision returns dozens of rooms to the local tourism accommodation pool for visitors to central Australia.
"COVID is very different now from the initial cases we saw when people needed two weeks' quarantine if they had the illness," she said on Wednesday.
It comes as the territory reports 251 new cases to 8pm on Tuesday, with 1604 active cases.
There are 24 patients in hospital, including two in intensive care.
Meanwhile, the NT government will introduce a bill to parliament to amend the Public and Environmental Health Act 2011.
The change would give the NT Chief Health Officer the power to make health directions for two years as the territory transitions from the current emergency declaration.
That declaration has enabled the Chief Health Officer to issue health directions over the past two years to slow the spread of the virus. It ends in 90 days.
"This is preparing the territory for that next phase of COVID going from a pandemic to an endemic," Ms Fyles said.
More than 3800 people quarantined at the Todd River facility since the pandemic started in 2020.
18°C