Deputy Premier and Minister for Regional NSW John Barilaro was in Nyngan on Friday to announce the funding which will be used to not only help to expand the Nyngan Station museum and visitor centre, but transform Girilambone's railway station into a tourist attraction site.

The funding comes from the $170 million Drought Stimulus Package, which aims to deliver economic benefits for local economies experiencing the flow-on effects of the drought.

"We're very excited about it, it wasn't expected, but it's appreciated and not only going to help our tourism, but benefit local employment and businesses," Bogan Shire mayor Ray Donald said.

It is expected the funding will support establishing a visitor hub at the Girilambone station which will include a gallery, small coffee shop, camping site and toilets. A share of the funds will also pay for the expansion of the Nyngan Station museum and visitor centre.

Museum Coordinator Leonie Montgomery said she was "overwhelmed" by the announcement.

"It's just so amazing, we've been planning for so long to get this upgrade to move into the old SES building and the sheds that are associated with it," she said.

"So now to see that it's actually going to happen ... is amazing."

Mrs Montgomery said plans for the museum include the installation of a "business precinct" room and a showcase of farming history in the area.

"We've got the front doors of the California cafe which was in the main street and we've got some California cafe silverware and curved glass signage ... we've got the court sign, an old cash register, so basically the business precinct and what's been happening over the years," she said.

"All of the crockery and sewing machines will go into the new building. Upstairs will be the apparel, the nursery room, a hospital room because the red cross have got some things they wanted to donate to us.

"We're also going to have a Palais theatre room, so that's going to be really really exciting too.

"So it's a matter of spreading out so people can see what's here because it's huge."

Councillor Donald said the work will also help simulate the local economy, through the use of local resources.

"These projects will involve local contractors, from plumbers, electricians and builders and will involve the purchase of materials locally, so that's all going to help the project have a local benefit," he said.

The mayor thanked the NSW government for its financial support, and the council for their work applying for the grant almost two years ago.

For further information about the NSW Government's Drought Stimulus Package visit: www.nsw.gov.au/droughtstimuluspackage