The 24-hour Inventive Factory was held in October as part of the Museums at Night initiative and has now been short-listed in the Project on a Limited Budget category in the Museums and Heritage Awards for Excellence.
Thousands of people voted for the museum to host the event, which came with a grant of £3,000.
The result was a vibrant 24-hour festival combining music, performance and art which involved amateur and professional artists, community groups and students.
Councillor Gillian Keegan, cabinet member for commercial services at Chichester District Council, said: ‘It just goes to show that innovation and hard work can make a small budget go a long way.
‘The 24 Hour Inventive Factory was the most ambitious event we’ve ever delivered, and the success of the event from start to finish is a real testament to the passion and commitment of the team.’