One of the biggest planning applications ever dealt with in Northern Ireland, the development will be constructed in the north east quarter of the city.
The area is contained within the boundaries of Royal Avenue, Donegall Street, Garfield Street and High Street.
It is estimated that it will bring 3,000 jobs to Belfast - 1,000 for the construction phase and, upon completion, 2,000 jobs in retail and leisure.
The development includes approximately 50,000 square metres of new retail floorspace - almost half of which will be housed within a single 'anchor store'.
Cafés and bars, a 25 bedroom hotel, more than 200 apartments, offices, a new cultural arts centre, car parking for more than 1,000 vehicles and new public spaces will also be created.
It is hoped that the development will further establish Belfast as a major European regional city, attracting more visitors, and boosting the evening economy and city centre living.
Alderman Christopher Stalford, Chairman of Belfast City Council's Development Committee, said the announcement is another step in the city centre's regeneration.
There is still a lot of work to do to get the scheme on the ground but it is an indication of the bright future that lies ahead of Belfast and the ambition there is for the city.
Alderman Christopher Stalford
"City centres are facing all sorts of challenges in these increasingly stringent economic times but today's announcement gives Belfast a real chance of not only maintaining its success but flourishing.
"Belfast City Council has played a major part in the regeneration of the city during recent years and the launch of our investment package earlier this year was a clear statement of our commitment to work in partnership with the private and public sectors to ensure success," the councillor added.
The construction of the Royal Exchange will involve the demolition of a number of existing buildings, but will also include works to restore listed buildings and facades - including the reinstatement of the North Street Arcade rotunda and its facades.
The planning proposal will also bring back to life Belfast's oldest public building - the Northern Bank building, on Bridge Street.
The Minister said the granting of the planning permission is "tremendous news" for the city in terms of both the environment and the economy.
"The proposal aims to create a new environment in the city and revitalise an area of Belfast that has been without meaningful development for a number of years.
"I am very conscious that there is a need to protect the historic fabric of the City and this I have balanced carefully alongside the wider strategic benefits of the proposed scheme," Mr Attwood said.
"The economic, physical and social benefits will impact positively on many people's lives whilst sympathetically rejuvenating the historic centre of Belfast. I am convinced that we can redevelop our heritage and create many more jobs in a way that cherishes and protects our environment."
Glyn Roberts, of Northern Ireland Independent Retail Trade Association (NIIRTA), said: "This is a good news story for the future of Belfast City Centre which will increase its retail offer and address the serious problem of derelict buildings in that area.
"Royal Exchange is exactly the type of city centre retail development which we have always championed, rather than unsustainable out of town hypermarkets," he continued.
Mr Roberts said NIIRTA would be keen to work with developers to ensure there is the potential for independent retailers to locate to Royal Exchange.
"We would be interested in discussing with Royal Exchange the option of offering new Retail Incubator Units to replace the In-Shops," he said, referring to the well known complex which closed earlier this year due to rental costs.