Newry and Mourne District Council endorsed the proposal for a 120-bed hotel, over 22,000 sq ft office development, landscaping and car parking.
The project is to be located at the former ATS Garage at Downshire Road in the city and was last week given planning approval. Environment Minister Mark H Durkan said it could provide hundreds of jobs in the border town.
"It's a significant development scheme which will provide a real boost for the city and surrounding area for many years," he said.
"The new hotel will benefit tourism potential, providing accommodation in an area that is the gateway to the Mourne Mountains."
The applicants are Merit Investments and Properties Ltd, part of the Magherafelt-based Conway Group, which has worked on a number of high profile developments including Premier Inn sites in Londonderry and Lisburn.