The funding will be used to secure the embankments, reduce water leakage and introduce improvements to the way the canal's habitats are managed.
The work programme includes repairs to the Talybont Aqueduct, the introduction of over 20,000 pollinator plants and the planting of 4.5km of canal bank to increase biodiversity.
The Welsh Government funding is supporting an essential part of Glandŵr Cymru's wider project to reinvigorate the water corridor from Brecon to Newport and from Newport to Cwmcarn, for the benefit of its communities and its wildlife.
Work is already underway, with the canal drained early this week and fish rescues taking place, with the participation of local school children, later this week.
Announcing the latest round of funding, the environment secretary said:
"Living waterways have the potential to transform places, bringing economic benefits to the surrounding communities and improving health and well-being.
"I am pleased we are able to support Glandŵr Cymru's ambitious project to reinvigorate the waterways from mid to south-east Wales, some of which travel through some of our more deprived areas and have the capacity to bring huge environmental, social and economic benefits."
Richard Parry, chief executive of the Trust said:
"We're delighted to have received this huge boost for the Monmouthshire & Brecon Canal from Welsh Government, who share our vision to put Wales' waterways at the heart of local communities. This funding will allow us to do essential work to ensure the long term future of the canal, and deliver benefits to the local economy and enrich the lives of its many visitors and everyone who lives around it."