The tourist attraction, on the Newry Canal towpath, has been boarded up since last July.
Now, Craigavon Borough Council is proposing to appoint a new caretaker, refurbish the building and open it again as a tourist attraction.
The caretaker, who will live in the cottage, will be responsible for its upkeep and opening the listed building to the public.
The proposal is expected to be given the green light by the council within the next month, and the lockhouse is expected to open again in July, in time for the busy summer season.
The work to upgrade the lockhouse will include the installation of a heating system, a replacement bathroom, new kitchen, fire alarm installation, repairs to the roof, gutters and drainage, and internal and external redecoration.
stables
A spokesperson for the council said the outbuildings and part of the house will be open to visitors. The outbuilding include the stables - which will house information panels, a model of how Moneypenny's Lockhouse would have looked, and a toilet - while the bothy, where the lighterman spent the night, will be furnished with a tables, chair, bed and open fireplace.
The section of the house which is open to the public will be converted to look like the old office, with a desk, dresser, bed and a washstand.
The refurbishment work should start in May and the caretaker should be in residence four to five weeks after that.
Moneypenny's Lighthouse will open every Saturday and Sunday afternoons and on Bank Holidays from 2-5pm, from Easter to September. Booking can also be taken outside these hours for groups such as schools.
free
Admission is free but there is a small charge for groups outside the normal opening hours.
The Newry Canal first opened in 1742, with the last commercial lighter, or barge, using its waters in 1936. The canal was eventually abandoned in 1950, and since then there have been sustained calls to open it to small craft as a tourist amenity.