The council received the 'Development on the Ground Award' at the Scottish Awards for Quality in Planning.
The award was presented by Cabinet Secretary Alex Neil.
Judges described the project as "an impressive commitment from both planning and transport to resolve modern day activity within an historic place.
"Overall, through gradually addressing different demands on the market square, and re-engineering how traffic is handled, the outcome has been a restoration of civic pride and confidence in the town."
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Features of the regeneration included:
• The Kelso Townscape Heritage Initiative.
• Traffic management and public realm enhancements.
• A gap site building.
• Shop front enhancement scheme.
• Public art installation.
The project was delivered in partnership with Heritage Lottery Fund, Historic Scotland and the local community.
Councillor Ron Smith said: "This programme of work was three years in the planning and took five years to deliver. It was very much a partnership project with the local community and brought various teams together from across the Council, town and partners, and the successful co-ordination brought great results."
(LM/MH)
