The £100,000 grant will be used to invest in new digital technology, promote the event better across the UK and help extend the “lifespan” of Fringe shows around the world.
Some of the funding is also expected to be used to help the Fringe find a new year-round home in the city centre.
Culture secretary Jeremy Wright said: “The Fringe has launched the careers of some of the UK’s finest writers and performers and we want to ensure it continues to go from strength to strength, helping to break new acts here and across the globe.
“This funding will help the Fringe increase its digital capability, making it even easier for visitors to enjoy everything this world-class event has to offer.”
Fringe Society chief executive Shona McCarthy said: “Over the past 71 years, the Fringe has developed into one of the world’s leading performing arts marketplaces, a vital springboard for artists’ professional development, collaboration and co-commission.
“This announcement from the UK Government recognises the transformational power of the Fringe in making and shaping careers in the arts, both here in the UK and all over the world.
“Thanks to the this support, we will be able to identify the very best in emerging talent and showcase it on the global stage, ensuring the Fringe (and by extension, Scotland and the UK) remains at the forefront of the global arts landscape.”
The Scottish Government already supports the Fringe to the tune of £550,000 which pays for Made in Scotland, an annual showcase of Scottish music, dance and drama.
Both governments are hosting a three-day international cultural summit in the city later this month.