Funded by both DSD and Down District Council, the plans announced by Minister McCausland include a portable cinema and a covered outdoor space to allow events all year round.
A marketing campaign will also be launched to encourage more visitors to the coastal seaside town.
Councillor Patrick Clarke said: “I am delighted that the Social Development Minister has today announced a £255,000 investment to assist Newcastle under the Revitalisation Project to help deliver a number of projects designed to promote and assist Newcastle as one of the top tourist destinations in Northern Ireland.
“I am very pleased that plans include a portable cinema, marketing campaign and a covered outdoor space, which will help to enhance Newcastle, promote the local economy as well as regenerate and help to grow Newcastle town centre have now secured this financial investment from DSD.
“No doubt the £255,000 by DSD together with the remaining £32,000 coming from Down District Council will also help to further increase footfall into the popular seaside resort.
“Since the completion of the public realm scheme a number of years ago, Newcastle has seen a dramatic increase in the number of visitors and tourists that visit, footfall alone has increased by over 400 per cent.
“Through the combined efforts of the committee established under the Revitalisation project the Newcastle Chamber of Commerce, Down District Council and DSD, this further investment of £255,000 by DSD will help to continue to develop economic development and increased tourism potential in Newcastle.”