The grant will help pay for musicians, street entertainers, performers and a procession.
It is just one of four festivals and shows the Town Council has supported this year.
Councillors also awarded £1,000 to the Sacred Music Festival being hosted by Holy Trinity Church, and Hawkwood College’s Seed festival will receive £300 and £1,000 for Stroud Show.
Sarah Watson, one of the members of the Stroud Fringe committee, said the Town Council grant would make a huge difference to the festival which is on August 28-30.
“We are delighted that Stroud Town Council has been able to offer us such fantastic support for this year’s festival,” she said.
“The grant that they have awarded to us is a significant contribution which will enable us to begin our five-year plan to develop the event to reflect the wonderful creative town of Stroud.
“Their recognition that Stroud Fringe Festival is an important event in our community calendar, and their willingness to do all they can to help us make it happen really is something special; where else but Stroud could this happen.”
Councillor Steve Hurrell, chair of the council’s Finance, Community and Policy Committee, said the grants reflect the Town Council’s continued commitment to the arts and culture of the town.
“These festivals add to the rich cultural diversity of Stroud and help make this town vibrant and exciting,” said Councillor Hurrell.
“We want to encourage events for local people to enjoy and also attract more visitors to Stroud, which has a growing reputation for arts and cultural activities. The council’s support for festivals helps put the town on the tourism map.”
The council awards small grants to local groups of between £50 and £500 and community support grants of between £500 and £3,000.
The next deadline for grant applications is August 28. Application forms and further information are available here.