Works will take place on St Patrick's Square, Market Street, Scotch Street, Grove and St Patrick's Avenue areas of the town.
Funding will be spent on upgrading footpaths, ensuring better use of space for civic events, new street lighting, and street furniture.
Regeneration Minister Margaret Ritchie said the town is on the "cusp of a physical renaissance".
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"We have a new further education college, a new cinema, a new hospital and many other exciting developments planned. But the town centre needs a major upgrade," she said.
"This investment will benefit the people and the town centre greatly. It will provide much needed improvements to the appearance of the centre of the town and will allow a better use of St Patrick's Square for a wide range of activities."
Ms Ritchie encouraged everyone with an interest in the historic town to have their say on the proposals outlined.
The public realm scheme proposals will be on display at the St Patrick's Centre until this Friday (26 June). People will also be able to comment on the plans at the exhibition.
The scheme will be undertaken in partnership with Down District Council and the Department for Regional Development.
(PR/JM)
