The former St John Ambulance premises in Elm Street, which has been empty for more than five years, will be converted to provide open-plan office space for about 15 people.
Leader of South Kesteven District Council, Cllr Kelham Cooke, who has been a driving force behind the proposal, said: "The demand for office space in Stamford currently exceeds supply, and while this is a relatively small refurbishment scheme we are confident that this new office provision will be in demand from new and growing Stamford businesses.
"Over the past three years, we have had a continual demand for such a facility in the town centre, including during Covid-19. The open-plan design will provide the flexibility needed to ensure the refurbishment meets current and future needs."
The 1,200sq ft building, which is also a former fire station, is in the town's Conservation Area and will be restored in keeping with the surrounding area.
SKDC's Cabinet (Tuesday 18 August) approved the award of a contract of just under £230,000 to Lindum Group Ltd for the refurbishment work. Planning permission for the refurbishment was granted in May 2020.
Cllr Cooke said: "I am delighted we are now in a position to take forward this exciting project that will restore a notable heritage building to its former glory. The building is in an excellent location and will help to create or safeguard jobs in the town."
Work is expected to start soon and take around three months to complete.