The park, at the south of Sunderland Minster, is part of the Bishopwearmouth Townscape Heritage Scheme that was confirmed earlier this summer.
Altogether, £1.9m from the Heritage Lottery Fund has been awarded to the council for this scheme which is set to run for five years. It is offering building and repair grants to property owners and the make-over of Town Park is part of it.
There are 22 other potential building restoration and enhancement projects in the scheme with a value of up to £1.2m.
The £423,000 update to the park, subject to further decisions, including planning permission, could see work starting in spring 2019.
Councillor Stuart Porthouse, the City Council's Cabinet Member for Housing and Regeneration, said: "Thanks to the lottery funding, the council is looking to improve the park and, alongside this, support a series of other works in and around this historic area.
"Enhancing the park and helping to improve other listed buildings are all about creating higher quality, more attractive, secure and usable public spaces.
"The council has a strong track record of working with its partners on improvements and, as well as improving our city scape for residents and visitors, it all helps attract further investment from businesses."
The heritage area contains 11 listed buildings including the Grade II* listed Empire Theatre, Sunderland Minster, and the Peacock and Dun Cow Public Houses.