The project to develop the church and restore the former medieval monastic complex and the former courts at the abbey is estimated to cost £3.2m.
The grant means work can start on the monastery buildings, and it is hoped that they will open in September 2013.
The remaining funds will be raised by the Abbey to complete the restoration works.
The lottery money will also be spent on creating new exhibition spaces, meeting rooms and educational areas for children.
The Abbey's Rector, Canon Graham Usher, said: "We are tremendously grateful to the HLF for its support for our mission to restore and redevelop the former monastery buildings to create a resource for the whole community."
Hexham Abbey has been granted £1.8m by the Heritage Lottery Fund (HLF) to contribute towards restoration work.