The new 150-place school with community facilities on the former site of Ysgol Maesydre with the old Grade II listed building, currently occupied by Welshpool Church in Wales Primary School, refurbished to accommodate early years and community facilities.
A new extension will be built to include a new school hall and classroom bases.
Powys County Council is behind the project, which is says will help the deliver its 10-year strategy for transforming education in the county which was approved earlier this year.
Councillor Phyl Davies, the council's cabinet member for education and property, said: “I’m delighted that we have been granted planning permission.
"The new school will provide our learners with 21st Century facilities while preserving and modernising a Grade II listed building for the community of Welshpool to use.
“We have a strategy to transform education in Powys and the school, Gymraeg Y Trallwng, shows our commitment to deliver this important strategy.
"When complete, it will provide a learning environment that will allow learners and teaching staff to thrive and reach their potential through the medium of Welsh.”
It is anticipated that construction work will commence following the completion of the new Welshpool Church in Wales Primary School build, which is due to open in the new year.
The school construction project is being funded by the Welsh Government 21st Century Schools Programme and is 50 per cent funded by Powys County Council.
The project is being delivered in partnership with Heart of Wales Property Services.