The council says it will switch to six national, non-disciplinary programs from the current 147 discipline-based programs in 2017.
It says the goal is to offer "a simpler, more artist-centred application process, to respond proactively and constructively to current trends and issues in the arts."
Among them, it says, is the emergence of new art forms that don't clearly fit into the existing programs.
The council stresses, however, that those currently eligible for grants will remain eligible under the new funding model.
The new grant programs include one focused on aboriginal arts and one aimed at promoting Canadian artists' global profile.
"The ways in which art is created and consumed are changing rapidly. The Canada Council is transforming to respond to these changes — starting with our New Funding Model," the council's director and CEO, Simon Brault, said in a statement.
"By making our grant structure more open and flexible, we can better meet the ever-evolving needs of Canada's dynamic arts sector and the Canadians who benefit from it."