Her Majesty's Penitentiary has been renovated and expanded several times since it first opened but critics say the building is hopelessly outdated.
Justice Minister Darin King says the province is issuing a public request for proposals to companies with correctional expertise.
He says it's a planning exercise that will allow the province in 2014 to consider detailed project costs and a construction schedule.
A 2008 review of custody in the province recommended the aging penitentiary be replaced.
Ottawa pays the province to house several federally sentenced inmates at the jail but has repeatedly refused to help fund a new building.