Calderdale Council's cabinet agreed to transfer the historic building to a community-run charitable trust this week. The transfer will be made to Hebden Bridge Community Association, a registered charity specially established for the purpose of running the Town Hall.
The association saw off competition from a rival bid by Hebden Bridge Light Opera Society and Calder Valley Youth Theatre to take over extra rooms in the building to create rehearsal and performance space for the Hebden Royd community.
In the short term, the association is planning to bring a currently empty hall back into use and to renovate existing poorly-used meeting space.
At the same time a £4m project is underway which would see a set of new buildings constructed on currently vacant land next to the Town Hall to provide both a small enterprise centre and new community facilities.
Andrew Bibby, Hebden Bridge Community Association trustee, said: "This is a historic decision which will ensure that one of the finest buildings in our town continues to be a focal point in community life for many years to come.
"This is the culmination of more than two years' detailed discussions with Calderdale and of plenty of hard work by many in our community, all unpaid.
"We have undertaken a detailed business planning process to demonstrate that the Town Hall will be sustainable financially in the long term under community control."
Under the terms agreed, the association will acquire a forty-year leasehold of the Town Hall building from the council and will have to meet key targets as part of a management agreement.
The transfer will not affect the town and parish councils which currently use the building. Calderdale Council will remain as one of the building's users and will become a tenant of the association.
Coun Ian Cooper, Calderdale Council portfolio holder for safer and stronger communities, said: "I am happy that we have had the chance to be involved in a scheme which will give local people more influence and a greater sense of identity."
The association is member-controlled and has the support of more than 450 local people who have signed up as members and Friends of the Town Hall.
Local town and parish councils and many community organisations have also given their support.
Coun Janet Battye (Lib Dem, Calder), who has been actively engaged in the initiative and is a trustee of the association, said: "What Hebden Bridge is pioneering is a new way of looking after public assets.
"This is an enormously exciting development which I believe will secure the future of the Town Hall for the very long term.
"What we're seeing today is the same community pride which was there when the Town Hall was first put up in 1897."