As a state agency in the Commerce Cabinet, the Arts Council is funded by state budget allocations, as determined by the General Assembly and the National Endowment for the Arts. The Arts Council, in turn, provides arts-focused grants and programs or services to every county in Kentucky.

Grants provide funding for organizational support, artist residencies in schools and communities, touring subsidies, professional development for artists, arts administrators and teachers, traditional arts apprenticeships, and projects that expand arts offerings and increase participation in the arts.

Programs include the Craft Marketing Program that works to expand the state's craft industry, and the Folklife Program, an interagency partnership with the Kentucky Historical Society that conserves and promotes the rich cultural traditions of Kentuckians. Training and technical assistance are achieved through professional program staff; five "Circuit Riders," employed as regional representatives; and partnerships with other state-wide organizations and agencies.

The Arts Council also provides information resources through research, conferences, workshops, publications and directories, web communications, data sharing, and personal consultations and referrals.

In a broader sense, the Arts Council plays a critical role in promoting cultural tourism, enhancing economic development, and securing a strong foothold for the arts in education.