Mid Ulster District Council's Planning Committee approved the plans during its meeting on Monday 07 January.
The project will deliver new footways, parking and loading bays, stone kerbing, street furniture and tree planting, as well as improved lighting and drainage.
A new one-way system will also be introduced on Main Street, along with widened footpaths, to help improve traffic flow and pedestrian safety.
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Chair of the Planning Committee, Councillor Cáthal Mallaghan, said: "This is an important scheme for Coalisland, which aims to create a safe, high quality and pedestrian-friendly environment which also improves traffic flowing and parking.
"It represents a significant opportunity to contribute to the revitalisation of the town centre, with enhancements to the overall visual amenity of the core retail area, helping to encourage more shoppers and support business development."
The scheme is subject to funding from the Department for Communities (DfC) and will progress once a funding allocation is confirmed.
(CM/MH)
