The $2.2 billion rail line would link the Carmichael coal mine, west of Rockhampton, and Abbot Point near Bowen, in north Queensland.
It will be able to transport 100 million tonnes of coal a year and will create more than 2,000 jobs.
The State Government said the construction phase of the rail line would inject nearly $800 million into the local central Queensland economy.
Queensland’s coordinator-general has imposed a number of conditions to address groundwater and air quality issues, and to protect flora and fauna.
But it was the alignment of the rail line that had caused the most problems, facing criticism from landholders and LNP Member for Gregory, Vaughan Johnson.
Some landholders have remained unhappy with the planned route, raising concerns about compulsory land acquisitions and concern about the rail line being built on a floodplain.
The project now awaits Federal Government approval.
Deputy Premier Jeff Seeney said two years of consultation and research had gone into the State Government’s approval.
“In this approval, and all subsequent approvals that are yet to come, we will ensure those impacts are identified and dealt with properly,” he said.
Mr Seeney said developer Adani would need to reach an agreement with each affected landholder.
Premier Campbell Newman said he had also asked the coordinator-general to work with landholders.
“The co-ordinator knows that he can have a positive impact on mitigating anything that occurs on those properties,” he said.
“People concerned about the positioning of a railway line within a few hundred metres, and that can make a difference in terms of someone’s irrigation or stockyard.
“Those changes are the ones that I’ve personally asked the coordinator-general to be very mindful of on the ground.”
Mr Newman said the project would create thousands of jobs.
“Getting this approval means that we’re one step closer to seeing Adani kick off what is going to be one of the largest coal mines in the world,” he said.