Chancellor Rishi Sunak announced the awards as part of his package of measures to help the country to recover from the coronavirus pandemic.
Scarborough Council had applied for £25 million for each of Scarborough and Whitby from the Towns Fund but instead the two towns will share a pot of £37.3 million.
Scarborough is to get £20.2 million and Whitby £17.1 million.
The Towns Fund was promoted as a way to invest into places across the country that are in danger of being “left behind” economically.
Scarborough Council leader, Cllr Steve Siddons said he was “delighted” at the success of the bids.
He said: “I am very, very happy. I’m delighted at the outcome and it is testament to the hard work put in by the two Towns Fund Boards, business leaders, community groups and all the officers.
“We will now sit down and look at the projects and prioritise them and see when we can get on with them.”
Last year, Scarborough Council and the Towns Fund Boards for both towns produced a list of projects it would look to take forwards if both towns got the £25m they had each applied for.
In Scarborough these included:
* £6 million for a 16km Local Cycling And Walking Infrastructure Plan that would connect the town centre to Scarborough’s colleges and the Cinder Track.
* £5m for Scarborough Harbour regeneration
* £1.8m for interactive wildlife sculptures and hides.
* £1.4m to create a “FabLab+” in the town centre.
* £7m to overhaul the “gateway to Scarborough” from the train station with a new “public realm” and commercial properties.
In Whitby, projects previously announced included:
* £10m to build and set up the Whitby Maritime Academy.
* £2.6m for carbon neutral “self-build” homes for local residents.
* £3m to expand Pannett Art Gallery and Whitby Museum.
* £1m to improve the Grade II listed Town Hall and Market Square
* £750,000 to create a “Whitby Innovation Hub”.
* £2.3m to pedestrianise Whitby Swing Bridge.
Cllr Siddons said the council may look to see if funding could be secured from elsewhere for some of the projects if the cost could not be covered from the Towns Fund award.