Owner Merthyr Tydfil Housing Association is working to develop plans to restore the 112-year-old building so it can be used as a cultural and creative industries centre for the community as well as a social focal point for the town.
The project has Welsh Government and Lottery heritage funding and is expected to take 17 months to complete.
Councillor Jeff Edwards, Leader of the Merthyr Tydfil County Borough Council, said: “The restoration of the old town hall is vital for our exciting Merthyr Learning Quarter development as well as the regeneration of the town centre.