Caradon planners had refused the application to convert a Liskeard tattoo studio and garage into a massage parlour and escort agency.
But a planning inspector gave permission after an appeal.
Some local people are furious at the development and said they will be watching the parlour closely to make sure it abides by the regulations.
'Reassure residents'
Councillor Roger Jones, Caradon District Council's deputy leader, said: "Local councillors are aware of continuing community concern about the prospect of a massage parlour in a residential area.
"We have to recognise that the business now has a legal right to operate and Caradon expects the massage parlour to operate strictly within the terms of the planning permission and other regulations.
"Should it not do so, we would like to reassure local residents that Caradon will respond to any breaches of control with appropriate action."
Opponents to the massage parlour are planning a demonstration on Saturday.
Hugh Davies, of Liskeard Against Massage Parlours, said: "The town made it quite clear through the planning process that it did not want this type of business anywhere in this area.
"It's Liskeard today - it could be your town tomorrow. It's now down to the community to speak up."
Massage parlour owner, Marc Evens from Plymouth, has said it would be a discreet and a professionally-run business.
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