Improvements and additions to the arena will include an eight-lane athletics track, 3G synthetic pitch, floodlighting, fencing and ancillary works.
The project will deliver a Track Mark accredited athletics facility and a FIFA accredited synthetic surface for association football, complementing the existing high-quality facilities within the arena.
Sport NI's Multi Facility Fund, made possible thanks to National Lottery players, provides investment to create multi facility environments (with a mixture of indoor and/or outdoor provision) creating more opportunities for community participation in sport.
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Sport NI Interim CEO, Richard Archibald, said: "At Sport NI we believe in the power of sport to change lives and our National Lottery funded Multi-Facility Fund is helping councils like Mid Ulster maximise sporting opportunities for local communities.
"Thanks to this investment, the Mid Ulster Sports Arena will strengthen its position as a community hub for sport, providing more opportunities for sports clubs, community groups, youth groups, schools and residents from across the district to participate in sport and physical activity."
Northern Ireland Communities Minister Gordon Lyons also welcomed the investment. He said: "This significant investment will create a fantastic community facility, encouraging more participation in football and athletics.
"The funding will play an important role in helping more people of all ages and abilities to be more active, more often."
Sport NI has worked closely with Mid Ulster District Council and Disability Sport Northern Ireland to ensure the design is fully inclusive for people with disabilities and meets the requirements of the Inclusive Sports Facility Guidelines.
