The decision comes into effect next year and fits with chief executive Andy Duncan's vision of making Channel 4's services available on as many platforms as possible.
FilmFour will eventually be available free-to-air on all digital TV platforms, including Freeview, Sky and cable.
The move means subscription revenues will be lost, but Duncan is counting on an increase in viewers attracting more advertisers. FilmFour currently costs Sky customers £7 a month.
Last week Channel 4 spent £12m on additional capacity on the Freeview platform to launch more channels.
The broadcaster is currently using the slot to show a time-shifted version of its entertainment channel More4. According to insiders, this is likely to be used to screen the FilmFour channel.
At the time of C4's purchase of the slot, Duncan said: 'Capacity on the digital terrestrial television channel is a scarce commodity and this deal allows us to accommodate our full current line-up of free channels and keep our options open for further channel launches.'
Last Christmas FilmFour was temporarily made freely available to cable and satellite subscribers in a bid to drive subscriptions.
Duncan announced in April that E4 would no longer be a subscription service and the channel went free-to-air for the launch of the sixth series of Big Brother. It led to E4 doubling its share of viewing year on year and it has since become the most watched digital channel among 16- to 34-year-olds.
Channel 4 declined to comment on its plans for FilmFour.
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