Bundanoon's Pill Factory is set to transform into a boutique hotel.

Wingecarribee Shire Council recently approved an application to turn the Anzac Parade site into tourist accommodation with a restaurant and small bar.

According to the application, the accommodation will include 12 individual rooms, with an accessible room located on the ground floor and 11 rooms on the first floor.

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Internal alterations will be undertaken to provide each room with en-suite bathroom facilities.

Two rooms will be designed as family rooms, with a common entry to a central family room.

The Pill Factory is currently hired out as a whole building for guests' exclusive use.

Under the new development, guests will have access to a shared lounge/living room space on the first floor.

There will also be a multi-purpose lounge/games area on the attic floor level with access to an open balcony.

There will be a total of 14 car spaces at the premises, which equates to one space for each of the 12 rooms and two spaces for site managers.

One of the spots will provide an accessible car space for guests living with disabilities.

The Pill Factory was previously as the Gasthof building, among other names.

The mid-Victorian building is an item of heritage significance, according to the Office of Environment and Heritage.

The owners of the Pill Factory have been contacted for comment.