Planners gave unanimous support for the detailed designs for a new indoor market, public square, Picturehouse cinema and an arcade within the former library building.
The council committee also approved the inclusion of a multi-storey car park as part of the £60m first phase of development.
The Chester Northgate Scheme will be built over two phases of construction to deliver around 400,000 sq ft of new retail, restaurant and leisure facilities.
Councillor Richard Beacham, Cabinet Member for Housing, Regeneration and Growth said: “Planning approval for the first phase of the Northgate development is a welcome milestone in a long and complex journey towards building a brand new leisure destination in the heart of Chester.
“This is long-awaited and much needed investment in this part of our city centre and it will have a positive impact for residents, local businesses and the local economy with the creation of new jobs and new work for local suppliers.”