A sailing academy and outdoor events centre scheme in Pwllheli, Gwynedd, has been given an £8.3m boost.
The Welsh Assembly Government money will back Gwynedd council plans to develop the area as an internationally-recognised sailing venue.
It will initially create eight jobs, but more are expected as the development gets underway.
Assembly heritage minister Alun Ffred Jones said the academy will bring social and economic benefits.
He said it would also encourage participation in sport and physical activity.
"It will ensure that more people than ever before can take advantage of the splendid facilities here in Pwllheli, and have the chance to enjoy sailing," he added.
The project is also seen as a way to bring more events to the area and attract more tourism.
The plans include a new academy building on Glan Don peninsula.
It will provide changing rooms, meeting and training rooms, and a restaurant and bar.
Coun Dewi Lewis, Gwynedd council's economy and community portfolio holder, said Cardigan Bay is recognised as "one of the best areas in the British Isles" for sailing.
"I am confident that this exciting project will exploit these features and will build on the existing facilities," he added.
He said that more emphasis was being put on outdoor activities, and the council was keen to give children, of all backgrounds, the opportunity to enjoy the county's "natural resources".
Gwynedd council plans to deliver the scheme in partnership with Pwllheli Sailing Club, the Welsh Assembly Government; North Wales Water Sports, Plas Menai; Coleg Meirion-Dwyfor and the Welsh Yachting Association.
Stephen Tudor, Pwllheli sailing club's secretary, said the club had already been successful in attracting national and international sailing competitions.
"There is no doubt that this provides a huge boost to the local economy as people from all over the world come here to sail, and they see what else the area has to offer," he said.
Mr Tudor added that the current facilities were "unsuitable and insufficient" compared to other sailing clubs.
"We are over the moon to see these plans taking fruition," he said.
"This will secure our place in the competitive outdoor activities market, and also means we can attract ever more significant events," he added.