Whitchurch Silk Mill in Hampshire continues to produce silk using Victorian looms and hydro-powered machinery.
The £2m scheme will see the Grade II* listed building preserved and the interior remodelled.
The machines will also be repaired and enhanced to allow workers to pass on the skills to trainees.
Engineer Laurie Price said: "Our oldest machines are 1890s and they go all the way up to the 1960s so it shows the development and who was on the mill.
"We really want them to all work, we want them to be set up with different projects and things to put in the shop - making sure it's still a factory so that visitors can come and experience the whole traditional silk mill."
The mill, built in 1815 on the River Test, opened to the public in 1990.
It runs an educational programme and the renovation project will allow pupils from Berkshire and Hampshire greater access to the historic facility.
Claire Isbester, chairwoman of the silk mill's trust, said remodelling the interior would allow the building's "special qualities" to be appreciated by visitors more easily.
The project is being part-funded with £1.7m of Heritage Lottery Funding and a grant of £100,000 from the Greenham Common Trust.
A working silk mill that has been operating for more than two centuries is to be restored and repaired.