Wakefield Council will use the Heritage Lottery Fund grant to open parts of Pontefract Castle not accessible since the mid-1600s.
Work will include restoring paths and platforms which will allow visitors to reach the Sally Port and Swillington Tower areas of the site.
It could see the castle removed from English Heritage's 'at risk' register.
Further work will include extending the arts and crafts area to include a shop and café.
Wakefield Council and English Heritage will provide additional funding to the £3.5m project.
Councillor Peter Box, leader of the council, said: "We are delighted that Heritage Lottery Fund is supporting our work.
"The money will help put Pontefract on the map for tourists, building on what is an already popular site, and will certainly bring wider economic benefits into the town."
The castle was built in the 11th Century and is reportedly the site of King Richard II's imprisonment and murder.
It was used as a Lancastrian stronghold during the Wars of the Roses (1454-85).
During the English Civil War (1642-1651) the Royalist castle was besieged by Parliamentarian forces and was demolished in 1649 on the request of the townspeople.
Since then, the castle has been used as a place for liquorice cultivation and as a tourist attraction.
A scheme to preserve the ruins of a medieval castle has been given a £3m boost.