Councillors approved the application for the Grade II listed building in Red House Park, despite nearly 200 objections.
Protesters did not want homes to be built next to the historic building and said they were 'disgusted' with the decision.
They felt the area should have been kept as parkland to be used by the public and insist there is not enough parking space to support 14 new homes. The Red House will become eight flats.
A petition containing more than 100 signatures was handed to Sandwell Council's planning committee ahead of its decision.
West Bromwich MP Tom Watson also called on bosses to refuse the application. But councillors insisted the plans presented a viable future for the landmark former care home.
Developer R8 Space Ltd will fund its renovation as part of its conversion. Many campaigners said they had no qualms with the plan for the building, but argued there was no need for homes to be taking such a historic site.
The claim was dismissed by some in the council chamber who pointed out the land had previously been built on.
Bill Gunn, aged 83, who is chairman of the Friends of Red House Farm group, said: "I am absolutely disgusted. This is parkland. If they want to put something at the side of it, they should put something there the public can enjoy.
"I don't care what they say, it's parkland. I am pleased that the building will be looked after but I would rather it be used a community centre."
David Fisher, 38, who is vice-chairman of the group, said: "We're all disappointed. We understand something needs to be done to the Red House, but it's the fact they are building on green belt land we are unhappy about. It will allow only seven parking spaces for the public which is not enough."
Residents also fear lack of space will lead to nearby streets being clogged up.
There was also bitterness from the group over the fact the council had put money towards the restoration of Lightwoods House and Park in Smethwick but would not do the same in Great Barr. Councillor Roger Horton said the application was in the best interests of the park, adding: "Red House Park is so important and I think it needs to be safeguarded."
The Red House sits in a 27-acre estate. It was a care home and has been empty since 2004 and repeatedly vandalised and lead stolen from its roof. There had previously been suggestions the Red House could be used for the community but the authority says it would cost about £1.7 million to bring it back into use.