The project involves renovating the three main vacant buildings at Burntisland into 25 'affordable' homes.
The development will be made up of one, two and three-bed flats, two-bed wheelchair bungalows, a two-bed wheelchair flat, a three-bed house and a four-bed house.
In addition, dedicated parking spaces will be built.
The three buildings will be fully stripped out while an old boiler house has already been demolished along with the rear single-storey extension and old toilet block.
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Demolition of the classroom huts is also almost complete.
The Scottish Government is providing a £25,000 grant towards the projects cost.
Cllr Judy Hamilton said: "This is going to be a beautiful housing development when it's completed. Some of these buildings date back almost 140 years and I'm so pleased that they are going to be given a new lease of life as very much needed affordable housing.
"A similar regeneration project in Cupar in recent years converted the site of the former Bell Baxter High School into affordable housing.
"This development contributes towards our wider commitment of delivering 2,700 new affordable homes by May 2017. We're making good progress on that with almost half now built and occupied.
"We also have 19 other developments currently under construction across Fife to deliver on that pledge of more good quality, affordable housing."
(LM/MH)
