Berwick Preservation Trust has revealed that sufficient funding is now in place for the construction phase of the project to begin.
It is planned to create an arts and exhibition centre, a bistro with outside courtyard seating, meeting rooms and a 42-bed youth hostel.
Trust chairman, Jamie Andrew, said: "This marks the culmination of six years of hard work since we published the feasibility study which for the first time identified the possibility of a sustainable future for Dewar's Lane granary.
"We're absolutely delighted that we've been able to create a viable business plan, with a realistic and robust set of proposals for the operation of the building, while at the same time securing the implementation of that plan by putting together a funding package that will deliver the construction programme.
"Our thanks must go to all those people and organisations who have contributed - in time, money, advice and expertise - to what will be by far the biggest project ever undertaken by the preservation trust and one that will being considerable benefits to this wonderful town."
There had been concerns in some quarters that the project would never get off the ground as costs spiralled from the initial forecast of £3.8 million.
However, a £1 million grant from the Government's Sea Change initiative and about £600,000 from One NorthEast has helped meet the revised figure.
John Smithson, the trust's executive director who helped lever in the funds, said: "I don't think any of us realised just how much time would be needed to do all the work and get all the funding in place.
"When you think that all the trustees give their time voluntarily - none of them gets paid a penny for what they do - it makes you realise the extent of the commitment they have made to a project that, by turning an eyesore into an asset and encouraging tourism, will bring huge benefits to Berwick."
All told, he made approaches to more than 100 charities, businesses and individuals; and produced or commissioned more than 40 separate reports and other documents on different aspects of the project.
A key element in the project's credibility has been the relationship developed between the trust and Youth Hostel Association (YHA).
Trust vice-chairman, Ian Douglas, who is chairman of the project team, explained: "We've negotiated a deal whereby the YHA take a long lease on the granary and this effectively underwrites its long-term future as a sustainable operation.
"So it's not a case of restoration for restoration's sake, but rather the creation of a viable commercial entity on the back of the preservation of a valuable piece of Berwick's heritage."
This two-pronged approach has attracted funding from a huge range of sources, some concerned with the heritage aspect and others with its sustainability.
Major funders have included One NorthEast, Sea Change, Berwick Borough Council, Heritage Lottery Fund, Northern Rock Foundation, Youth Hostels Association, English Heritage and Northumberland County Council.
Kelso-based M & J Ballantyne have been appointed as main contractors for the construction phase following an exhaustive selection process in which there were 25 initial expressions of interest and five formal tenders. Project architects are Berwick and Eyemouth-based Bain, Swan.
The construction work is scheduled to take almost two years. Although some preliminary work will be undertaken before Christmas, the main work will commence after the festive break.
The most difficult part is expected to be the painstaking replacement, piece by piece, of the granary's existing timber frame by a new metal frame to ensure the building's stability. This is expected to take eight months so there will not be much progress to see from the outside for some time.
The Grade II listed granary was built in 1769 and its distinctive 1.2m leaning walls - greater than that of Pisa's famous tower - were immortalised by artist L S Lowry in a 1936 drawing.
It was in use for storing and mixing grain and seed until 1985 when, following the merger of grain businesses in Berwick, it became disused and fell into disrepair.