Work on the 6,000-capacity ground, on the outskirts of Truro, is expected to start this summer.
Truro wanted to build their own stadium at Silver Bow, but developers branded it "no longer financially viable".
"The joint agreement will enable the strong prospect of a stadium to finally be built," a statement issued by the two clubs read.
"The community stadium will rival other similar venues currently found throughout the country."
Truro will joint-fund the £10m ground with Championship club Pirates and Truro & Penwith College. The stadium's capacity is expected to eventually be increased to 10,000.
It is hoped that both teams will be able to use the stadium, which will be suitable for League Two football, by the 2019-20 campaign.
Pirates will remain at the Mennaye Field until then, while City will start next season at Treyew Road, potentially groundsharing with Bodmin Town before moving to the new home.
Truro chairman Peter Masters said: "Whilst (vice-chairman) Philip Perryman and I are disappointed that Silver Bow will now not go ahead, we are delighted to have taken a further step towards securing the club's future in National League South, after so many months of uncertainty."
Completion of the deal is subject to a number of legal agreements.
National League South club Truro City will share the Stadium for Cornwall with rugby club Cornish Pirates.