Council taxpayers in Carrick will be underwriting the cost of the Falmouth Oyster festival by up to £4,650.
For the next three years Carrick District Council will subsidise the event to the tune of £2,500 as well as losses up to the agreed figure.
The festival celebrates the River Fal's traditional industry.
The financial commitment will be reviewed annually with any profits ploughed back to reduce the subsidy in the next year.
This year's festival will be organised by the National Maritime Museum.