Coventry Transport Museum will redevelop a 12th-century school building and improve its galleries and visitor facilities with a £4.6m grant from the Heritage Lottery Fund.
The project is set to be complete by April 2015, when a new learning programme will also be launched with aims to attract 30,000 visitors to participate in heritage and community development activities.
The renovated Old Grammar School, which has been unused for the past 30 years, will serve as an exhibition, event and education space.
It is in close proximity to the museum and is a grade-I listed building, included on English Heritage's
'at risk' register.
The museum galleries will be improved to better explain Coventry's transport heritage.
Reyahn King head of Heritage Lottery Fund West Midlands said: "Coventry was and is so important to the motor industry and cars are in its DNA.
"Coventry Transport Museum tells a tremendously important story about the area and the UK as a whole."
