Cambridge City Council approved the plans, submitted by rail network operation Network Rail, at a meeting earlier this week.
The proposed Cambridge Station Interchange would comprise a new railway station and an interchange facility providing access onto the wider public transport network, including a new link to an existing guided busway.
The station would have three new platforms alongside retail facilities, a 1,000-space cycle park and 450-space car park for passengers.
The development would be built on land at Chesterton Sidings at Cowley Road in the city.
A planning report said the proposal would "result in local environmental impacts … most notably a modest net loss of biodiversity of county significance and noise and vibration impacts for the closest residential properties."
But it added that planners considered that "mitigation measures including acoustic fencing and ecological mitigation measures" would lessen these impacts.
The report concluded that the proposal would "contribute to the economy of the local area by acting as a catalyst for redevelopment of the surrounding area. It will have a positive impact on accessibility to homes and jobs and provide a sustainable alternative for commuting by car."
Network Rail said that building work is set to start this autumn and the new station is anticipated to open in December 2016.