The project will see a major refurbishment of the historic Victorian building as well as the building of a brand new wing.
Catering for a capacity for up to 300 pupils and 30 early learning and childcare places, the new Dunoon Primary School will see the refurbishment of the existing west wing (phase one) and the demolition of the current east wing (phase two).
A brand new east wing will be constructed to include a family centre, gym hall, library, early learning and childcare centre, and staff accommodation and will be linked with the refurbished west wing by a feature staircase.
Approximately £10 million is being invested in the school, with half coming from the council and the remainder coming in support from the Scottish Government.
The school will remain open during the refurbishment and building work.
Policy lead for education, Councillor Yvonne McNeilly, said: “I am delighted that we are now able to take this massive step forward with our plans for Dunoon Primary School.
“It is the council’s ambition to make Argyll and Bute a place people choose to live, learn, work and do business and very much part of that vision is making sure your youngest residents have the very best start in life.
“Getting the Dunoon Primary project off the ground is another major milestone in our commitment to delivering new schools fit for the 21st century.
“I look forward to seeing the new building take shape over the months to come. Along with our forthcoming new school at Kirn, plus the replacement Campbeltown Grammar and Oban High, it’s an exciting time for the provision of first-class education in Argyll and Bute.”
Work will start this month and is scheduled for completion in spring 2019.