The ships that'll be scrapped are part of the so-called "Ghost Fleet" - a collection of mostly obsolete military vessels that are shedding toxic chemicals into the bay.
So far, 11 ships have been towed to dismantling facilities in Texas or on the Atlantic coast. But now the work will be done closer to home.
The U.S. Maritime Administration announced this week it's awarding a $3 million contract to a Petaluma company to scrap the ships at Mare Island.
"It won't have such a toll on the environment of taking a ship all the way down through the Panama Canal to some of the other facilities we have in the Gulf and the east coast."
U.S. Maritime Administrator David Matsuda says the project will also create around 100 jobs in Vallejo.
The work at Mare Island is expected to start next month.