The B-listed Victorian building, known as The Hive, already serves as a community centre for patients and their families, but the refurbishment will bring new facilities including a café, games area, sanctuary, art room and flexible performance space.
The grant from the Edinburgh and Lothians Health Foundation (ELHF) will also fund a range of smaller projects, developed by patients, carers and staff, including play and exercise areas in the hospital ground.
The cash pot will also help pay for shelters across the site for activities such as storytelling, crafts and outdoor cooking, artwork and permanent installations.
The ELHF said none of the projects were included in the £120 million redevelopment of the Royal Edinburgh campus, which is just getting under way and would not have happened without its intervention.
Brian Houston, chairman of the ELHF trustees, said: “The redevelopment of the REH campus is a major project which will span the next ten years.
“This will all take place while continuing to function as a busy hospital caring for some of the most vulnerable patients.
“We very much hope that The Hive, which is seen by many as a key focal point on the campus, will provide a place of calm and tranquillity away from not only the day-to-day treatment areas, but also the temporary disruption caused by the redevelopment.
“We know that The Hive would not be developed without the foundation’s grant, so this is really important for us to achieve.”
Foundation director Jane Ferguson said feedback had shown The Hive and hospital grounds were of great importance to patients and their carers, though they were not included in the redevelopment plans. “That’s where we can make a difference,” she said. “We are also aware of some exciting plans that will form part of phase two of the build, and look forward to hearing more in due course.”
Dick Fitzpatrick, project manager for the Royal Edinburgh Hospital campus redevelopment, said: the ELHF funding was “hugely exciting” and would allow the hospital to provide greatly enhanced therapeutic and recreational spaces.
“It will also mean that we are able to make full use of the beautiful grounds at the Royal Edinburgh campus,” he said.
“The renovation of The Hive will allow us to greatly improve the range of activities available to our current patients and those that will be transferring to the campus in the future.
“This, alongside a wide range of smaller projects, will have significant health benefits to our patients and will help to assist in their recovery. Our patients deserve nothing less.”
The £48m initial stage of the redevelopment includes new state-of-the-art premises for adult acute mental health inpatient services and an older people’s mental health assessment unit, as well as an intensive psychiatric care service and new Robert Ferguson national brain injury unit.
Phase one is due to be completed in 2016, but the whole project could take up to ten years to finish.