The Heritage Lottery Fund (HLF) has confirmed funding for the scheme, which is designed to help celebrate the 150th anniversary of the London Underground network.
Roughly half of the HLF funding will be go towards a 'learning participation' programme to engage with community groups in the London area.
Built in 1892, Metropolitan Railway Jubilee Carriage Number 353 is to be restored and give visitors the opportunity to explore early underground railway travel.
Craftsmen at the Ffestiniog Railway's Boston Lodge Works will be responsible for undertaking the restoration work, while the grant will also help fund an apprentice working towards a NVQ2 Level 2 in Carpentry. Boston Lodge is the oldest operational railway works in the world, building and maintaining steam locomotives and carriages for the Ffestiniog and Welsh Highland Railways as well as undertaking projects for other railways.
LTM director Sam Mullins said: "[The grant] will enable the museum to restore one of the oldest items in its collection and help to bring the heritage of the carriage and the London Underground to new communities and audiences across London."