The proposals for the People's Market are due to be discussed by Wrexham Council on Wednesday.
The council said the arts centre would be twice the size of the former Oriel gallery, which was housed in the town centre library.
But Plaid Cymru's Carrie Harper said there were doubts over cost, funding of the project and the location.
"There is a need for an arts centre in the town and the examples we've seen of voluntary grassroots hubs such as Undegun and Galeri 3B in empty shops have been a welcome boost for the town's cultural life," she said.
"But doubts remain as to whether spending more than £4m on converting parts of the People's Market and adjoining car park into an arts hub is the best way forward.
"It appears to be more of an attempt to make use of an existing building rather than creative thinking and providing the best location for the arts to thrive."
Councillor Neil Rogers, lead member for economic development and regeneration, said in December the plans were part of a "wider strategy to support the regeneration of the town centre".
The project would be funded by the Welsh government, Arts Council of Wale and Wrexham Council.
The council will also hear an update on how the first year of a £10,5m regeneration programme has gone.
Plans for an arts centre in Wrexham's indoor market have been described as "increasingly bizarre".