At an extraordinary meeting of the town council on Thursday, the town councillors voted to list the youth centre, which was closed permanently in March, as an asset of community value.
Chairman Fiona Martin proposed that the application be approved, which was then seconded and then voted upon.
This means that it will be put on the list if East Lindsay District Council agrees to list the building as an asset of community value.
If the decision is made, the youth centre working group, who submitted the application, have exclusive rights to raise the funds to buy the centre and have six months to do this.
The decision to permanently close Horncastle Youth Centre earlier this year was met with dismay across the town.
Since then Horncastle Youth Centre Working Group (HYCWG), headed up by Dominic Hinkins, who is also a town councillor, has been campaigning to save it.
Mr Hinkins said following the meeting: “I’m very happy at the decision, we’re really pleased and grateful for everyone who came to support it.
“We’ve got challenges to overcome and we’ve agreed to a meeting with Lincolnshire County Council to discuss this further so we will have to wait for the results but I’m happy that we’ve got a stay of execution for now.
“We are hoping to apply for grants for this sort of thing and we have excellent prospects of raising the money.”
The news was celebrated on social media as well, with comments on the Save Horncastle Youth Centre Facebook page all expressing their relief.
Julie Whanstall said: “The building is an asset to the community of Horncastle. As suggested before a community hub would enable all of the community to access the facilities.”
Shelley Wills added: “That’s fantastic news. Let’s hope the funds can be raised in the local community now to preserve this asset of the community.”