The funding will be used to help transform the Guildhall from a functional civic building into a multi-faceted visitor experience to include a tourist information point, permanent and temporary exhibition spaces and café area.
Arlene Foster said: "The Guildhall is one of the most significant buildings in the northwest and it has huge potential as a visitor experience.
"The completed project will see a big change in the emphasis of the building, from that of a mostly civic function, into a central hub and orientation point for visitors to Londonderry, whilst creating a link between the Walled City to the Peace Bridge and the Ebrington Fort site.
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"Developments will focus on the history, culture and heritage of the building and the wider Londonderry area. There will be a series of guided tours, events and interactive media, enhancing the offering on site and complementing other tourism initiatives in the city. Renovations will be completed in the spring of 2013, when the Guildhall, will re-open to join in with City of Culture celebrations."
The total cost of the Guildhall restoration project is £9.2million, of which the Northern Ireland Tourist Board (NITB) awarded £2.5million through its Tourism Development Scheme (TDS), as part of the Walled City Built Heritage Programme, and the Department of Social Development awarded £1million. The rest of the funding is being provided by the Northern Ireland Environment Agency, £450,000 and Derry City Council, £5.25million.
Minister McCausland said: "I am very pleased that my Department has been able to provide £1million in funding for this ambitious project from the fund created by the Executive to prepare Londonderry for the UK City of Culture 2013.
"The works will not only protect and maintain this key civic building for future generations to enjoy, but will also reconfigure its use and maximise its accessibility for city residents and tourists."
As a stand-alone attraction and as part of the wider Built Heritage and Walled City Signature Project, the Guildhall will aim to attract a wide range of visitors including local residents, overseas visitors, cultural and historical tourists, and niche, special interest and education groups.
(CD)
