The project, which hopes to create a more attractive and enjoyable space in the town centre that will encourage visitors, will see dozens of trees planted along Westborough and Newborough.
In addition, new 'wayfinding' signs, including maps and digital kiosks will be installed, with work expected to begin this month.
A new wayfinding app is also being developed, which will include a series of self-guided trails and interactive games.
Councillor Liz Colling, Scarborough Borough Council cabinet member with responsibility for inclusive growth, said: “It’s essential we invest in ways of helping local businesses bounce back strongly as we emerge from the grips of the coronavirus pandemic.
“The improvements we are making are part of our longer term ambitions to further enhance Scarborough’s reputation as a destination to visit, live, work and invest.
“We want to encourage people to come to the town centre, its local shops and attractions, and engage with their surroundings."
The app is designed to help visitors to the area easily navigate around Scarborough and will showcase its key entertainment venues, attractions and places of interest.
Alongside the trees, new seating will be created to encourage town centre visitors when lockdown rules ease.
The seating will be moveable to support a year-round cultural programme which is in development.
The new schemes are the latest in a series of joint initiatives announced by Scarborough's Borough Council, Town Centre Team and Town Deal Board.
The projects were paid for by the government through the Town Deal Fast Track funding, awarded to the council last December.
An artistic makeover of shop windows was the first initative to be announced earlier this month and other investment – including town centre public WiFi and a nature project will follow in the coming months.
Whitby has also been awarded money and has its own investment plan. Filey was not invited by government to be part of the Town Deal scheme but work is underway with Filey Town Council to develop an investment plan for the town.
David Kerfoot, chairman of the Scarborough Town Deal, said: “By re-imagining the town centre in a flexible way, we can build resilience to economic challenges and move on from negative perceptions to achieve greater footfall and investment.
"It also forges stronger connections from railway station to shore. The idea is a modern, greener high street, embracing the visitor volumes of the harbour and seafront.”