The contract has been awarded to Hunter Clark of Glasgow, one of Scotland's leading building, public works and masonry contractors.
The company will work to designs drawn up by award-winning Malcolm Fraser Architects to transform the historic building into an arts and heritage venue.
A traditional sod cutting ceremony was carried out in the garden area at the Burgh Halls to mark the start of work on site.
The refurbishment project is scheduled for completion by March 2010.
The budget to transform the Burgh Halls is £5,221,500 made up of partnership funding of £3,818,000 from West Lothian Council, £772,500 from the Heritage Lottery Fund, £381,000 from Historic Scotland and £250,000 from the Scottish Arts Council.
Malcolm Fraser Architects created designs for the redevelopment following extensive consultation with key stakeholders.
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The restored Burgh Halls will be a multi-purpose centre featuring heritage interpretation, visual arts and crafts, arts education programmes, events and activities.
Schools will use it as a resource to study the long and fascinating story of the building, its links to the Palace and St Michael's Parish Church and its long-standing central role for the Linlithgow community.
The redevelopment will also strengthen the building's traditional role as Linlithgow's Town House, staging events and celebrations including the Marches, the Advent Fair and folk, arts and book festivals.
The redevelopment of Linlithgow Burgh Halls is the third part of West Lothian Council's three-venue arts strategy, which has already refurbished the Regal Community Theatre in Bathgate and is redeveloping Howden Park Centre in Livingston.
Councillor Martyn Day, who chairs the Linlithgow Area Committee, said: "I am really pleased that work is starting on the redevelopment of the Burgh Halls. When completed, this will secure the long-term future of this important building as an arts, heritage and multi-purpose centre which will greatly benefit the people of Linlithgow."
Councillor Peter Johnston, Leader of West Lothian Council, added: "We warmly welcome the funding support of our partners in this exciting new project. Linlithgow is widely regarded as the jewel in the crown of West Lothian and the new-look Burgh Halls will be an important addition to the attractions of the town."
Executive councillor for culture and leisure Jim Walker commented: "The redevelopment of the Burgh Halls is the final phase of the council's arts development strategy, which will completely transform our three main venues at Bathgate, Livingston and Linlithgow."
(GK/JM)
