The money recognises the achievements made by Willows High School not just in dance and drama, but also in more mainstream academic subjects. It is the most improved in Wales in the five GCSE grades A to C category - rising from 6 to 24 per cent between 1995 and 1996.
The centre, to be completed by the start of the next academic year, will house dance, drama and music studios, exhibition space, and sound and video recording studios.
The local communities of Splott, Adamsdown and Tremorfa are not usually associated with the finer arts. They rank high in deprivation league tables and exhibit all the associated problems, including young people hanging around the streets with nothing to do.
Head Mal Davies said that when young people were asked what amenities they wanted, the opportunity to continue with drama in their leisure time came out top in the survey. Two years on the school hopes its centre will cater for everything from being a DJ to a Shakespearean actor. It will build on the school's own drama productions, a lunchtime youth club and books published by the English department about the area and its people.
Mr Davies said: "Drama was the first area in the school to pick up in GCSE results and it provided the stimulus to raise standards generally. To continue we need to take the community with us and this arts centre will help us do that."
He said it would give parents a chance to see what education could do for their children in an area where it was often seen as not having much to offer. Links are being established with Welsh National Opera and the Sherman Theatre. A post-16 course in performing arts will also be offered.
Mr Davies said: "This centre will provide a cultural focus for the area with workshop venues and performance space where people can develop their talents as well as their appreciation of the arts."
The school has its own Scream Theatre company, and will also offer pupils the chance to develop technical skills in sound, lighting, recording and film-making.
Pupils hope that the centre will create opportunities. Robert Noyce, 16, said: "There is a lot of talent in the school and the new centre will help to bring that out. There is nothing around here in the way of facilities. I enjoyed doing drama and now I will be able to carry on."