Merthyr Tydfil Housing Association is converting the Grade II* listed building, which has been derelict for more than 10 years, into a community cultural centre.
The work is expected to take 17 months and the new centre is scheduled to open in September 2013.
The scheme has been designed by architects Austin-Smith:Lord.
Merthyr Tydfil College, part of the University of Glamorgan, will base their performing and visual arts courses at the Old Town Hall.
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