The scheme is one of seven in the country to be awarded cash as part of the scheme.
The council's innovative project plans to research and implement measures to decarbonise the country’s street lights and introduce the next generation of road signs, road markings, and cat’s eyes, able to reflect brighter in vehicle headlights.
The council's scheme will cost a total of £4.6m, the Government cash plus £1.3m match-funding from the council.
Currently, the UKs 7.2m street lights cost £3.5billion a year.
They produce one million tonnes of carbon emissions, contributing to the damaging impacts of climate change.
In the first project of its kind in the UK, the council plans to carry out studies into the way roads are lit, and then use the data it gathers to work with other councils across the country in order to drive change and create a new standard in street lighting for the future.
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Trials are to be carried out along two of the East Riding's busiest roads - the 31 mile stretch of the A1079 Hull to York corridor and the A164.
For the pilot scheme, the council has partnered with ten others in England and others in Wales, Scotland and Northern Ireland.
It has already teamed up with Sheffield University, the Institute of Lighting Professionals and lighting companies to discover new, innovative and alternative products.
The scheme aims to explore more efficient uses and layouts for street lights, road signs and road markings.
Councillor Jonathan Owen, leader of East Riding of Yorkshire Council, said: "This work is not only massively innovative – it will be the only such work of its kind in the UK – so the East Riding is leading the way.
"This will be the country's first ever major review of street lighting, and how people perceive and appreciate different types of lights and differing levels. "Britain's current road signs regulations were brought in in the 1960s, so it is high time they were reviewed and improved.
"Through this pilot scheme, we want to achieve major change and massively reduce energy consumption, and by doing that develop new guidelines to be adopted by local authorities nationally."
East Riding of Yorkshire Council has 40,000 streetlights and 2,300 illuminated signs. So far 75% have been converted to lower-energy LED lighting.
