Wakefield Council is threatening to take enforcement action if health bosses do not save Clayton Hospital.
The site on Northgate has been boarded up since Mid Yorkshire Hospitals NHS Trust relocated its services in 2012.
And the derelict building has been plagued by vandalism since it closed.
Coun Denise Jeffery, the council’s cabinet member for economic, growth and skills, said: “It is totally unacceptable for a publicly responsible body to allow this building to fall into such a dreadful and dangerous state.
“The site is now a blight on the city centre and on the community. It is devaluing the area causing concern and upset for nearby residents.
“We simply cannot allow this to continue. We are asking the trust for a meeting and will be seeking urgent assurance that this will be sorted out.
“We have threatened to take enforcement action if it is not dealt with.”
Coun Jeffery urged the trust to find a new buyer for the former hospital.
She said: “This would undoubtedly financially benefit the trust, as well as helping the community and supporting the regeneration of the city.”
The council has identified the building as a number of derelict sites across the district it wants to regenerate.
The trust’s general facilities manager Iain Brodie said: “We appreciate the concerns surrounding Clayton Hospital and we are doing all we can to make the site as safe as possible.
“The ongoing schedule of works to secure the site has already included roofing works to the main tower, the installation of vehicle defence blocks, and substantial improvements to the landscape on both the Wentworth Street and Northgate side of the site.
“We are also liaising with specialists and our local partners – including Wakefield Council – to see how we can boost security around the site and increase patrols on evenings and weekends.”
Clayton Hospital was founded in 1854 and after 1948 it became part of the newly-formed NHS. The services were provided there until three years ago.