The museum will receive the federal government funding to support the development of two major exhibitions and projection-art program over two years.

Castlemaine Art Museum director Naomi Cass said she was thrilled to receive the support.

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The Future Beacon project will include seven artists' commissions projected onto the exterior facade of the building, an exhibition of contemporary indigenous art, and an exhibition of prominent artist David Rosetzky.

The funding will also support the employment of a part-time curator, a public programs co-ordinator, and an indigenous curatorial role.

"This grant will enable CAM to deliver a suite of exciting commissions, working with First Nations artists and mid-career artist David Rosetzky, bringing CAM's significant historical building and streetscape to life, for the pleasure of the local community as well as visitors to the region," Ms Cass said.

The funding comes under the government's $25 million Restart Investment to Sustain and Expand fund, targeted at getting Australia's creative sector to bounce back from the effects of COVID-19.

Projects will start in September 2021.

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Last month, the museum received $100,000 in state government funding for its master planning project.

Castlemaine's century-old art museum came close to shutting its doors back in 2017 due falling revenue and rising costs.

An eleventh-hour donation from an anonymous person saved the museum from immediate closure, with the $250,000 gift ensuring its doors stayed open for at least two more years.

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