The existing ski slope will be replaced with two new slopes to give a greater variety for beginners and more experienced skiers.
The smaller slope will be 105 feet long and 59 feet wide, with the larger one 328 feet long and 65 feet wide. Along with a ski lift and tow there will also be a table top jump area and moveable race gates to appeal to snowboarders.
The NSASC, a registered charity and social enterprise community organisation, has raised the funding through SportsScotland, The Robertson Trust, the Scottish Rural Development Programme and East Ayrshire Council.
Mike Scott, project manager at Barr, said the project was due to be completed by the end of the year: "We are aware of local residential areas and have been doing our best to keep noise levels low as well as restricting our working hours. The new facilities at the revamped Newmilns Snow and Sports Complex will be warmly welcomed by the local community and should attract skiiers and snowboarders from further afield."
Barr has around six people working on the site at the moment and that will increase to a peak of 12.
The first work at the site was clearing foliage and topsoil before the ground was shaped to create a steeper slope.
Robert Pollock, of NSASC, said: "We are looking forward to having an updated complex suitable for the needs of all our visitors from leisure snow sports enthusiasts to future snow sports racers.
"After spending much of our time raising the funds ourselves, we are looking forward to finally completing the renovation."