The former headquarters of the North British Rubber Company is to be redeveloped into a printmaking facility with a café, bar and learning spaces.
Creative Scotland has also confirmed further funding of £1.7m towards the project.
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Plans for Edinburgh Printmakers' £10m creative hub in Fountainbridge were submitted to the council by Page/Park Architects in July.
It is understood the centre will be open to the public in 2018.
Chair of Edinburgh Printmakers, Alastair Snow, said: "Castle Mill Works was once a powerhouse of industry and invention. Our plan will bring production back and place creativity at the heart of the community.
"We are delighted to have support from the Heritage Lottery Fund. It will allow us to bring Castle Mill Works back from the very neglected state it has fallen into and transform it into a vibrant cultural resource."
The North British Rubber Company was the birthplace of the Wellington Boot, the modern motor car tyre, and the first ever traffic cone.
(LM/JP)
