Plans for Clifford's Tower include a new viewing platform and an exhibition displaying the structure's 19th Century wall, which has been buried since 1935.
English Heritage, which manages the site, said the changes would "help celebrate the ruin".
If approved, the new facilities are planned to open in June 2017.
Clifford's Tower was built in the middle of the 13th Century but was left a ruin after a fire in 1684.
It has been involved in sieges and public executions, as well as being the location of the infamous massacre of York's Jewish community in 1190.
Jeremy Ashbee, head curator of properties at English Heritage, said: "We are investing in one of York's most iconic landmarks to tell the fascinating history of Clifford's Tower and its place in the city for generations to come in a way that's never been told before".
A historic medieval tower in the centre of York is to get a new visitors' centre in a redevelopment costing more than £2m.