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The Massachusetts Department of Transportation's (MassDOT) board has approved a land exchange agreement between the Massachusetts Bay Transportation Authority (MBTA) and Pan Am Railways that green lights the construction of a new Lechmere Station as part of the Green Line extension.

The station has been approved for a location on the east side of O'Brien Highway in East Cambridge across from the current station site.

"This landmark agreement represents an important next step in the Green Line extension project that will help create jobs in both the short- and long-term,” said MassDOT Secretary Jeffrey Mullan in a prepared statement. "At the same time, we have secured the use of important rights of way that are critical to our longer term rail vision and are important for the commonwealth’s transportation and economic future."

The MBTA also is obtaining the track and property rights necessary for building and operating the extension. In exchange, Pan Am is acquiring the current Lechmere Station property, which in 2006 had an appraised value of $32 million, according to MBTA.

Among key elements of the agreement, MBTA and MassDOT will receive:

• All trackage and property rights necessary to build and operate the Green Line extension, which have a combined value of $12.5 million.

• Trackage rights off the Worcester mainline to allow potential future passenger service from Worcester to Ayer, and provide a connection between the Worcester and Fitchburg Commuter rail lines, and a potential future connection to North Station.

• Trackage rights to provide future passenger service to New Hampshire, which would allow for the extension of MBTA commuter-rail service from Lowell to Concord, N.H., through Nashua and Manchester. That project ultimately would be sponsored and funded by the state of New Hampshire, similar to commuter-rail service to Rhode Island.