DCMS has awarded the additional funding to help Coventry City of Culture host Covid-safe events.
The latest financial boost brings Government investment in the third UK City of Culture year to £18.5m, including £8.8m from the Culture Recovery Fund.
The £3.5m will support enhanced hygeine measures to reassure audiences as restrictions ease.
Culture Secretary Oliver Dowden cited Coventry's "remarkable resilience and ability to adapt during these challenging and unprecedented times".
"I look forward to seeing how the next 12 months will benefit the local area as we build back better from the impact of Covid."
DCMS says it expects the year to deliver an economic boost of £211m, draw 2.5 million visitors to Coventry, and create 900 jobs.
It is hoped that 80% of the city’s residents will engage with the programme at least three times, and that it will attract around 10,000 volunteers.