The US electric car manufacturer said it was "extremely pleased" that local officials in the town of Gruenheide, where the factory is located, had voted to approve he extension.
Tesla opened the plant -- its only production location in Europe -- in 2022 at the end of a tumultuous two-year approval and construction process.
The carmaker had to clear a series of administrative and legal hurdles before production could begin at the site, including complaints from locals about the site's environmental impact.
Plans to double capacity to produce a million cars a year at the site, which employs some 12,000 people, were announced in 2023.
The plant, which already occupies around 300 hectares (740 acres), was set to be expanded by a further 170 hectares.
But Tesla had to scale back its ambitions to grow the already massive site after locals opposed the plan in a non-binding poll.
Their concerns included deforestation required for the expansion, the plant's high water consumption, and an increase in road traffic in the area.
In the new proposal, Tesla has scrapped plans for logistics and storage centres and on-site employee facilities, while leaving more of the surrounding forest standing.
Thursday's council vote in Gruenheide drew strong interest from residents and was picketed by protestors opposing the extension, according to German media.
Protests against the plant have increased since February, and in March the plant was forced to halt production following a suspected arson attack on nearby power lines claimed by a far-left group.
Activists have also built makeshift treehouses in the woodland around the factory to block the expansion, and environmentalists gathered earlier this month in their hundreds at the factory to protest the enlargement plans.
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