WORCESTER - The city was ready for its Hollywood close-up, but the state agency redeveloping the former Worcester State Hospital pulled the red carpet out from under the city last week.

Paramount Pictures and Academy Award-winning director Martin Scorsese had their hearts set on shooting the film adaptation of the Dennis Lehane novel "Shutter Island," at a cost of a roughly $35 million, at the decaying former mental hospital beginning in January, a state economic development official said.

But, after years of sitting vacant, much of the former complex is slated for the wrecking ball beginning sometime in February or March to make way for a new 300-bed, $278 million state psychiatric hospital, according to Kevin P. Flanigan, a deputy director of the state Division of Capital Asset Management.

"The bottom line is it's simply not available. We're about to begin construction there for the new facility for the Department of Mental Health," Mr. Flanigan said. "We're going to begin mobilizing next month, so project trailers and other equipment will begin showing up on site."

City and state cultural development officials said they were disappointed that a deal couldn't be worked out to accommodate the six- to eight-month shoot starring Leonardo DiCaprio, but they tried to put the best face on Worcester's near miss with Hollywood glitz - and green.

"It was just unlucky. It was bad timing," said Nick Paleologos, executive director of the Massachusetts Film Office.

"I like to look at it as the glass is half full," Erin I. Williams, the city's cultural development officer, said gamely. "This is our connection now with Paramount. I'm confident we'll bring something else in."

Late last month, Ms. Williams spent a day showing a crew of studio location scouts around the city as they hunted for possible locations for exterior and interior filming. She took the crew to the old Superior Court building on Main Street and to the Goddard-Daniels House on Salisbury Street and to old schools and many other locations, she said.

The initial scouting crew apparently thought the ominous Victorian gothic architecture of the 130-year-old Clock Tower building on the Worcester State Hospital grounds would match the dramatic tone of the film. Set in the 1950s, the book "Shutter Island" is about a U.S. marshal investigating the disappearance of a female murderess being held at a mental institution.

Mr. Scorsese's longtime art director, Dante Ferretti, came to Worcester the following week on Nov. 28 to personally scout locations in the city, Ms. Williams said. Mr. Ferretti has been nominated for seven Academy Awards and won the Oscar for Best Achievement in Art Direction in 2005 for the film "The Aviator," which also starred Leonardo DiCaprio.

"They really loved the Clock Tower for obvious reasons," Mr. Paleologos said. "It's such a unique and interesting visual. You can't get that look anymore in many places in Massachusetts."

Worcester State Hospital was the production's first choice for a filming location from a creative standpoint, although sometimes other factors such as cost and logistics can override those choices, Mr. Paleologos said.

The Clock Tower is not slated to be torn down as part of the new mental hospital project, but noisy demolition work is scheduled for the surrounding area during the same period the studio wanted to film there.