The cash will be split between the 22 Welsh councils - each receiving £10,000 - Education Secretary Kirsty Williams announced on Friday.
It follows a report into school music learning in 2015 which identified a lack of instruments as a barrier.
But Wales' most successful brass band - Cory - said more investment was needed.
"It's great that some money is being made available. But it won't go very far," said Cory's financial manager, Neil Blockley.
Cory Band is the world number one ranked brass band and has its own youth academy, developing young musical talent across south Wales, especially Rhondda Cynon Taff.
"Music education can be a catalyst for so much more than just learning an instrument," added Mr Blockley.
"It is about diversity and inclusivity - music gives youngsters a chance in life. So yes, it is great to see this investment - and no, it is not enough."
Ms Williams said it was part of a package to "ensure that all children in Wales have the opportunity to study music".
"We know that there have been some very difficult austerity measures that are weighing very hard on local government, who have the prime responsibility for this service," she added.
As well as making the cash available for buying instruments, it will also help councils establish a database of where their instruments are and how they can be shared across authority boundaries more effectively.
It follows an announcement in February of a £1m "endowment fund" to encourage Welsh school children to become musicians.
Emyr Wynne Jones, a member of a group that reported to the Welsh Government 2015, said there had been a "crisis in music services" after "10 to 15 years of successive cuts".
"We applaud that this Welsh Government, in challenging times, has found funding," he said.
He said the money could provide a county with up to 200 student training instruments, or perhaps a few expensive items such as tubas or harps - depending on where the money was spent.
But he also admitted: "Of course, it's not going to go very far. It's not enough - it's never going to be enough."
A £220,000 fund to help buy new musical instruments for schools has been welcomed, but community music champions have said more money is needed.