The future of the marina reputed to be the inspiration behind Coleridge's famous poem "The Rime of the Ancient Mariner", has been secured.
Watchet Harbour Marina Ltd will pay an annual peppercorn rent of around £1 for the lease of the 125-year-old port.
Storage space for up to 18 boats and room for a boat lift will be provided by the council, and car parking spaces will be made available for boat owners.
The lease includes a condition which prevents the marina being sold without the district authority's consent.
Councillor Geoff Day said: "This is an historic day for this ancient port of Watchet and I am proud to have been able to play my part in it.
"The lease completes the development jigsaw that has been the marina project, which we all recognise as a lynchpin of our plans for economically regenerating the town."
A total of £800,000 has been invested in the marina by Watchet Harbour Marina Ltd's parent company, Dean and Dyball.