Third Energy has become the first company to have a fracking application approved in England since a ban on the process was lifted in 2012.
North Yorkshire County Council has voted in favour of the application to extract shale gas at a site near Kirby Misperton in Ryedale.
The council's planning committee voted 7-4 in favour of approving the bid.
Fracking, which involves drilling then shooting a high-pressure water mixture into rock to release the gas inside, has not taken place in the UK since 2011.
It was banned after tests found that fracking was the likely cause of minor earthquakes on the Fylde coast in Lancashire five years ago.
There have been concerns raised that the drilling could contaminate the local water supply in North Yorkshire and damage the region's tourism industry.
Though fracking has faced stiff opposition from local communities, some businesses have welcomed the potential of shale gas to help Britain "keep the lights on".
Adam Marshall, acting director general for the British Chambers of Commerce, said:
This decision is a much-needed victory for pragmatism, in the face of the serious energy security problems Britain faces.
Businesses will want to see speedy development of this and other shale gas sites, together with maximum environmental and community consideration, not endless appeals. Fracking has the potential to play a part in solving the UK’s energy crunch, and create new energy-related jobs in many areas.
The application had sparked protests across the region. Andrew Cooper, Green Party energy spokesperson, said:
North Yorkshire County Council has let down the people of Kirby Misperton by passing this application for fracking today. The Green Party will continue to stand by local communities under threat from fracking operations and we will strongly oppose any attempts by central government to impose fracking against the will of local people.
At the end of last year Ineos was granted 93 licences for fracking across a further 2.8m acres of land by the government's Oil and Gas Authority (OGA) though the company will need further permissions from planning and environmental authorities, among others.
There are warnings however that the debate may still go on.
Energy and planning partner at lawfirm Pinsent Masons, Mike Pocock, said:
While today brings good news it may not be the end of the story. Given the level of objection there will no doubt be talk of a judicial review of the decision but this route is potentially costly and lengthy process focused on legal errors only and is not an opportunity to re-open the merits of the proposals.