The division, valued at $11 billion by Barclays, supplies to industries that make bullet-resistant armor to pharmaceutical packaging.
"Given the sustained market demand for advanced specialty chemicals and materials ..., we are confident now is the right time for this business to grow independently," CEO Vimal Kapur said.
Since taking the helm last year, Kapur has pivoted the company to the so-called mega trends of automation, the future of aviation and energy transition.
Honeywell has bought Carrier's security business for $4.95 billion and aerospace and defense firm CAES Systems for $1.9 billion as part of that shift.
The spin-off, expected to be tax-free to its shareholders, is likely to be completed by the end of next year or early 2026.
Honeywell plans to name a management team and a board for the independent company later.
It expects the advanced materials business to generate revenue of $3.7 billion to $3.9 billion in fiscal 2024 and have an operating margin of more than 25%.
Honeywell trimmed its annual profit forecast in July due to weak demand in its industrial automation business.
The company's shares were up 2% in premarket trading. They are down about 3% for the year.
