The work will see the town's historic High Street given widened pavements, a new pedestrian crossing, new parking bays and new street lighting.
The work will also include improvements to the historic vennels running from the High Street. The High Street will be closed for around 18 weeks while the work is carried out.
Cllr Russell Imrie, cabinet portfolio holder for strategic services, said: "Over the next few months we will be seeing massive progress in the 3.3m plans to regenerate Dalkeith.
"This work will bring new life to the town's historic high street shopping area, making it much more attractive. The exact date for the start of works is being finalised at present and all residents, shopkeepers and others will be kept informed."