In partnership with North Kesteven District Council and the Environment Agency, the aim is to help to connect communities and provide health benefits for residents.
The scheme will establish and improve riverside walks, and river environments, creating "blue-green" corridors. The work over the next three years will also help safeguard and enhance habitats for wildlife in and along the rivers.
The corridors will be created along the River Witham through Grantham and the River Slea through Sleaford, connecting isolated riverside habitats in urban areas to improve and maintain them.
The partnership, which also includes the National Trust, Lincolnshire Rivers Trust and local landowners, secured 60% of the project costs from the EU's European Regional Development Fund (ERDF) and provided 40% in matched funding between them.
SKDC's Cabinet Member for Commercial and Operations, Cllr Dr Peter Moseley, said: "We have worked closely for two years with all our partners on this project. It could not have reached this point without their support.
"We have the opportunity to create a vibrant riverside corridor for residents and visitors alike and, just as importantly, to make big improvements to the ecology of the area."
The plans feature linked improvement projects identified along a two-mile stretch of the Witham through Grantham, including:
- work to improve habitat and the appearance of the river at five points - Belton Lane into Queen Elizabeth Park; Wyndham Park; Sedgwick Meadow; Stonebridge Close; and St Catherine's Road to Bridge End Road
- creation of a wetland area in Queen Elizabeth Park
- development of a meadowland area at Sedgwick Meadows
A plan will be implemented for sustainable tree management all along the river corridor and a riverside path will be extended to link with the Spitalgate Heath garden village development.
Cllr Dr Moseley added: "Well maintained riverside areas provide communities with a host of benefits including preserving the natural environment, promoting healthy living and improving quality of life and we want to encourage more people to make use of them.
"There will also be benefits for the visitor economy because an attractive riverside corridor will bring more visitors to the area who will bring extra trade into our town centre."
Other key projects that have been identified run along the River Slea, and the partners are working together to ensure delivery of these improved habitats and footpaths are completed in the next three years.
Councillor Richard Wright, the leader of NKDC, said: "Sleaford's heritage is built around its waterways and to be part of a project that means we can preserve and enhance its habitats allowing our residents and visitors to make more use of them shows our commitment to our environment, and another step in the right direction."
Manfai Tang, Environment Manager at the Environment Agency, said: "This is a shining example of how closely we work with other organisations to make a real difference for people and nature.
"Not only will the community be able to enjoy vibrant, healthy and welcoming green spaces but this work will be a real haven for local wildlife. Together, we'll be creating precious habitat for protected species like water voles and native crayfish, and making it easier for trout and other fish to migrate and spawn.
"We're really pleased to be able to contribute to this project in line with our 25 Year Environment Plan which will see massive steps towards protecting and improving the environment within a generation."
The ERDF supports projects preserving and protecting the environment.