The local authority will use the funding to operate the Tyne Esk LEADER programme throughout the Midlothian and East Lothian regions.
The initiative is part of the Scottish Rural Development Fund which comes from a source of European Funding.
It is understood the programme, supported by the Local Action Group (LAG) will be the third LEADER scheme operated in the area.
A Local Development Strategy (LDS) has been approved by the Scottish Government and involved extensive consultation with local communities.
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Some of the common issues raised in the discussion included local environment improvements, improved streetscapes and improved green spaces, the lack of activities for families, children, young people and older people, the need for more local employment opportunities, traffic calming and transport issues, and proposals for community hubs/shops/gardens.
Andrew McDonald, the Chairman Tyne Esk LEADER LAG, said: "This programme will welcome applications for as many projects as possible that will fit our priorities and should bring much-needed jobs and added prosperity to our rural areas.
"We already have some amazing success stories in Tyne Esk from previous LEADER programmes and we wish to build on this."
Grants for the initiative will be awarded until 2019 before the LEADER programme ends in 2020.
(LM/MH)
