Curlewis Preschool, run by Ooranga, is set to undergo an infrastructure overhaul through a successful funding grant.
Ooranga will receive a $65,000 grant to build a new toilet for staff and kids at the preschool, replacing the old, outdoor building which is on a very heavy lean.
The funding is provided through the federal government's Drought Communities Program in partnership with Gunnedah Shire Council.
Ooranga executive officer Rebecca Dridan thanked the government and the council for the funding.
"Thanks ... for partnering with us and making sure our organisation is able to support our local communities like Curlewis, which is only due to expand," Ms Dridan said.
"We're looking forward to supporting all of our families and their children with better facilities."
Gunnedah mayor Jamie Chaffey said the new bathroom would be a fantastic addition for an already "great facility".
"It's much needed as this old facility ... is well past its use by date so it's a great investment from the federal government," he said.
"This preschool is an important service to the Curlewis community."
The conditions of the funding program state that the project needs to be completed by the end of the year, and Ms Dridan is hoping construction will have begun by the end of September.