Environment Minister Alex Attwood made public his decision about the proposed Narrow Water Bridge on Friday morning.
"This will be a tremendous boost for the south Down/north Louth area," Mr Attwood said.
"Narrow Water Bridge will be the most significant infrastructure project in the border region for many years. Indeed, it will be the first North/South bridge since Partition."
The application for planning permission was submitted by Louth County Council and a separate application has been submitted in the Republic of Ireland.
"I hope that a similarly positive decision will come from planning authorities in the Republic soon in relation to the Southern end of the Narrow Water," Mr Attwood added.
I have stated time and time again that, around the scale and wonder of our built and natural heritage, there are big job opportunities.
Environment Minister Alex Attwood
The proposed single carriageway, cable-stayed opening bridge is one in a series of major planning announcements being made by the minister.
The project is seeking £17.2m in funding through the Special EU Projects Body.
Mr Attwood said the 660 metre bridge would help boost cross-border tourism and create jobs.
"The bridge is an opening bridge that enables tall ships, leisure craft and other marine vessels access to the Victoria Lock and the Albert Basin in Newry," he said.
"The bridge will act as a gateway to the Mourne and Cooley Mountains for people and tourists south of the border, making it much easier for visitors travelling each way.
"It will be a great economic boost for the area, creating construction jobs in the short term, enhancing tourism and promoting greater community interaction across the border."
The Department of the Environment received a number of objections to the proposal.
They related to the potential changes to sedimentation in the navigational channel; access to the navigational buoys and lights on the Newry River; access to the control tower; and potential changes to the aids to navigation and road safety and traffic, particularly around the A2 Roundabout.
This project will be a powerful symbol of peace and of the greatly improved community relations in this region.
Finnan McCoy, Cathaoirleach, Louth County Council
But SDLP South Down MP Margaret Ritchie, a long-time campaigner for the bridge project, welcomed the decision.
"Many people in the local community in Warrenpoint and in Cooley in Co Louth who have worked on this project for years have yearned for this day to come," she said.
"Today's decision is testimony to their dedication, resilience, belief and hard work."
Sinn Féin South Down MLA Caitríona Ruane said: "This bridge can be the catalyst for economic regeneration in the region, by creating a tourism pathway between the Mournes and the Carlingford region of Louth.
"While this is another step forward, there is still much work to be completed and I would call upon all parties on both sides of the border to maintain the pressure to see this project completed."
The green-light for the proposed bridge was also welcomed in Co Louth.
The chairman of Louth County Council, Finnan McCoy, said the project has tremendous potential.
"It can help open out the entire east border region to visitors and make this a more integrated visitor experience," he said.
The county manager of Louth Local Authorities, Joan Martin, added: "The work to bring the Narrow Water Bridge this far has been an excellent example of cross-border cooperation.
"It endorses all of the effort that has gone in to building closer ties between our own local authorities and Newry & Mourne District Council through the unique Memorandum of Understanding.
"We now look forward to working together with East Border Region and our colleagues at the Special EU Programmes Body to move the project forward."