The school is to be built on land used by The Warriner School Farm in Bloxham Grove. It will cater for children aged seven - 18 years and is to be established by The Gallery Trust and supported by Oxfordshire County Council.
The Trust says it will mirror the values of The Iffley Academy, Oxford which was rated as 'outstanding' by Ofsted in 2015.
Kay Willett, Chief Executive Officer of theTrust said: “At present, many pupils who attend Iffley Academy have to travel from Banbury and Bicester to attend our school in central Oxford.
"By opening a school in north Oxfordshire, we can educate these pupils in their local communities. The growth of housing development and the population in Banbury and Bicester is increasing, which is putting further pressure on special school places.
"A new school offering places for pupils with cognition and learning difficulties, social, emotional and mental health difficulties and autistic spectrum condition will complement and extend the excellent special education needs and disabilities (SEND) already provided by the state funded special schools in the area."
A county council spokesman said: "The trust and school will obviously work closely with their parents, just as the trust does at all of their schools but it is not a parent-run school.
"The trust works closely with the County Council as it is responsible for a number of the county’s special schools. The school is being built by the Education and Skills Funding Agency (ESFA) on land previously used by The Warriner School. Admission to the school will be through the usual Education, Health & Care Plan process."
The development was part of a government scheme to provide 37 new special and alternative provision (AP) Free Schools in the next two years.
A government press statement said: "The new schools will be open to some of the most vulnerable children in the country - including those with education, health and care plans - whose needs have been prioritised throughout the pandemic with nurseries, schools and colleges remaining open for them where appropriate. Charity grants have also been provided to families on low-incomes with disabled children to pay for specialist equipment required during the lockdown period."
County Councillor Lorraine Lindsay-Gale, Cabinet Member for Education and Cultural Services, said: “Oxfordshire County Council welcomes this central government investment into additional special school places for pupils with autism spectrum disorder and social emotional and mental health difficulties."
The government says the new Free Schools will take advantage of the 'freedoms and opportunities provided by the free school system' to ensure that children with special educational needs and in AP are receiving the tailored support they need to fulfil their potential.