Planners at Penwith District Council have voted unanimously in favour of the £7m new market at Newlyn.
The market is being designed to ensure more fish is processed in Newlyn rather than sent outside the UK.
About £18m worth of fish was landed at the present market in 2007, which supports about 740 jobs.
"The market certainly is in need of modernisation"
The new market will be built alongside the exiting market, which will be demolished once the new facility is up and running.
People backing the development say change is needed because it would mean the most modern market in Europe.
It would also ensure that fish remained at the correct temperature throughout processing, which is difficult in the present draughty building.
Councillor Jan Ruhrmund, of the district council, said she thought it would be a great boost for the economy across west Cornwall.
She said: "The market certainly is in need of modernisation and this is a good model for the future.
"It will sustain the fishing industry in Newlyn and give it a viable future in the years to come."
Landing costs
Paul Trebilcock, chief executive of the Cornish Fisheries Producers Organisation, said he wanted to ensure all business aspects of the new market were considered, but added he was glad to see the plans approved.
He said: "Fish coming into Newlyn isn't going to be the issue. The issue is going to be the business case for a new market in terms of what it's going to cost fishermen to land and sell their fish in Newlyn.
"But, in principle, the improvement of facilities in Newlyn has to be welcomed."
There is a worry that 49 car parking spaces would be lost because the market would be moved.
But councillors at the planning meeting on Tuesday evening were assured they would be replaced as Newlyn's regeneration continued.
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