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The project involves an expansion to the existing Ballymote complex and the construction of a separate multi use sports hall.
Social Development Minister Margaret Ritchie said: "This new development will leave a lasting legacy for the people of this area. It will create employment opportunities locally and provide a community hub for everyone in the area."
She said the new sports complex would provide state of the art facilities for people of all ages and encourage participation in sporting activities.
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The Minister paid tribute to the other organisations that provided funding to the scheme and to the local community.
The project is just one of a number of high profile initiatives which are currently being funded by the Department in Downpatrick.
"Since becoming Minister I have made it clear that tackling deprivation and regenerating town centres is at the heart of my agenda. I am delighted to be able to back this up with action," said Ms Ritchie.
"Last month I launched the consultation into the £3m public realm improvement scheme for the town centre and earlier this year I appointed consultants to prepare a masterplan for Downpatrick town centre.
"This will be a major boost for the regeneration of Downpatrick and is a clear indication of my determination to help guide the town and its residents through the challenges of the current economic climate," she added.
(PR/JM)
