The theatre is one of 17 “community treasures” to share £8 million from the Department for Levelling Up.
It is undergoing a major redevelopment designed to secure its future, with the refurbished venue expected to open in 2025.
The council-owned theatre is run by the charity Capital Theatres.
Its chief executive Fiona Gibson said: “We are absolutely thrilled by this generous investment in the redevelopment of the King’s Theatre from the Community Ownership Fund.
“This enables us to ensure the King’s offers a fully accessible welcome to audiences, artists and staff alike, and preserves it for future generations.
“We are immensely grateful for all the support received so far to make this project possible and to save the beloved King’s Theatre for Tollcross, Edinburgh and beyond.”
The building will be extended to improve its disability access and a new community hub is planned.
Levelling Up Secretary Michael Gove said: “Investing in communities improves lives – whether that’s rebuilding a community centre, rescuing historic pubs and theatres, or upgrading sports facilities used by families every day.
“These are unique and cherished places, valued by local people of all ages, and we know how much they mean to communities.”