Work starts on Monday to transform a site near The Pullover at Chapel St Leonards into an outdoor theatre.
There will be three-tiered seating in the style of an amphitheatre looking out towards the sea, new surfacing and furniture.
Funding for the seven-week project includes a £72,700 contribution from WREN.
Lincolnshire County Council’s executive member for economic development, Colin Davie, said: “This project will create a fantastic new space for the local community, bringing people together.”
He said the facility will be of ‘real benefit’ to the area.