The premises is currently occupied by business incubator hub, Cre8te Opportunities Limited.
The Centre in Peffer Place was built in 1936 as the Niddrie Marischal Secondary School, which later became an annexe of Craigmillar High School.
An Art-Deco style building, it is category B-listed and owned by the Council.
The announcement of this funding will help to transform the premises into quality office space for 40 units. It is currently under 50% occupied due to the poor condition of the building.
In addition, Edinburgh Council, alongside Cre8te, have applied to Historic Scotland for a repair grant of £500,000 to assist with the work being proposed.
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Councillor Frank Ross, Convener of the Economy Committee, said: "The project has been recommended for funding by the £25m Regeneration Capital Grant Fund, which has been developed in partnership with COSLA and local authorities.
"Its aim is to provide financial support that will help to deliver large-scale improvements to regeneration areas focusing on projects that engage and involve local communities and those that can demonstrate the ability to deliver sustainable regeneration outcomes.
"This is great news for everyone involved in the regeneration of the Craigmillar area. Large parts of the listed building are not in use at the moment and have fallen into disrepair. This funding would attract new businesses looking for quality office space into the area, which in turn would have a knock on effect benefiting local shops and other businesses."
Neil Scott, CEO of Cre8te Opportunities Limited, added: "We are obviously delighted that, working closely with the Council, we have managed to obtain the funding to preserve this iconic building for the Craigmillar community which would otherwise have been lost.
"The refurbished building will provide much needed business space to nurture new businesses assisted by our most successful and award winning Incubator project. This is a massive boost for the regeneration of this area."
(JP/CD)
