The redevelopment of Rothesay Pavilion aims to transform the Grade A listed building into a hub featuring a shop, café, office space and venues for music and theatre.
The £1.06m ERDF fund well help set up affordable space for small to medium sized businesses to operate and grow their business, while around 16 jobs are expected to be created and retained through the investment.
Argyll and Bute Council and Highlands and Islands Enterprise are also providing £1.58m towards the office space and the wider project received £625,000 from the Scottish Government and COSLA's Regeneration Capital Grant Fund in 2015/16.
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Speaking during a visit to Rothesay Pavilion to view progress on the project, Economy Secretary Keith Brown said: "This £1 million European funding will help to re-establish Rothesay Pavilion as a cultural hub for the community, businesses and tourists.
"It will benefit businesses, giving them access to affordable office space which can help them grow and boost the local economy.
"With Brexit there is of course now a question mark over the future of this European funding. I will continue to call on the UK Government to provide clarity so communities across Scotland can have the certainty they need to develop projects that bring economic benefits to their area."
Cllr Gary Mulvaney added: "We are grateful to the Scottish Government for the additional funding which will allow the development of a hub for small and medium sized enterprises as part of the building's regeneration.
"The Pavilion will be transformed into a community and cultural facility. As well as bringing jobs we will deliver a tourist attraction for the island and beyond."
(LM)
