The water will be treated and diluted so radiation levels are below those set for drinking water.
But some locals, those in the fishing industry, as well as China and South Korea, have opposed the plan.
Tokyo says work to release water used to cool nuclear fuel will begin in about two years.
The final approval comes after years of debate and is expected to take decades to complete.
Currently, the radioactive water is treated in a complex filtration process that removes most of the radioactive elements, but some remain, including tritium.
It is then kept in huge tanks, but the plant's operator Tokyo Electric Power Co (TepCo) is running out of space, with these tanks expected to fill up by 2022.
Around 1.3 million tonnes of radioactive water - or enough to fill about 500 Olympic-sized swimming pools - are currently stored in these tanks, according to a Reuters report.
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