Traders have said they had suffered financial loss as well as ill health since the outdoor market relocated to make way for the upgrade last year.
There would be improvements to stalls and better access for pedestrians from the bus and Metro station, the council stated.
The authority is also investing £15,000 in activities and events in and around the indoor market to help drive footfall during the work.
These will start with several free events during August, such as a funfair, face painting and a treasure hunt.
City of Wolverhampton Council Leader Stephen Simkins said the upgrade would deliver a “first class” market and this time next year there would be “more modern, more accessible, and more vibrant spaces”.
“In the meantime, we have listened to traders’ concerns and are committed to supporting them during the works,” he said.
“This offer comes on top of the council investing millions of pounds in the major improvements that will make the market even better for them and their customers.”