Carisbrooke College in Newport had been due to merge with Medina College but the recommendation was rejected by councillors in July.
Funding for the scheme has not been finalised but the new facilities are expected to open in 2017.
Headteacher Peter Shaw said it was "great news for the island as a whole".
The Education Funding Agency and Department for Education approved the business case which included new science facilities, drama and music studios and a new school entrance.
Mr Shaw said: "This is absolutely tremendous news for all those associated with our fantastic learning community, especially following the uncertainty we faced earlier this year."
An Isle of Wight secondary school previously threatened with closure is to get new buildings and facilities in a major revamp.