The Winckley Square Project has received a grant from the Heritage Lottery Fund to help transform the area.
The cash will now be used to regenerate buildings, in a “simple, sympathetic, yet transformational” way.
Coun Peter Rankin, leader of Preston Council, said: “We’re delighted that the Heritage Lottery Fund has given us this grant.
“Winckley is an important Preston area for businesses, residents and visitors and this regeneration project will improve the area for everyone.”
Lancashire County Council leader, Coun Jennifer Mein, said: “This is a big step towards the overall regeneration of Preston city centre, and complements the work that we’re already doing on Fishergate to make it a nicer space for shoppers and businesses.
“We want to encourage new jobs and investment in a way that works sympathetically with the history and heritage of the square.”
With the funding, the project will work to enhance the area through repair and refurbishment of building, to support city-wide regeneration.
It will include bringing vacant premises back into use, enhancing the area’s historic streetscape and providing training in heritage skills for contractors and property owners.
Simon Turner, a director of the Winckley Square Community Interest Company, helping lead a separate £1million bid to HLF to enhance Winckley Square gardens, said: “This is brilliant news.
“We have been fortunate to see the plans and they are simple, sympathetic yet transformational. It’s another indicator that points to Preston’s health getting stronger.
“I’ve seen first-hand the effort and skill that has gone into the bid and the respective teams should be applauded.
“Our own bid will be submitted in February 2015 and should we have similar success it will breathe new life into a very important historical and economic area.”
Sara Hilton, head of Heritage Lottery Fund North West England, said: “Winckley Square is one of the North West’s finest surviving examples of a privately planned Georgian square.
“We are delighted to support this project that will restore and conserve historic buildings while at the same time providing them with a new lease of life that will add to the economic vibrancy of the area.”