New owner Mike Ashley and the property team at his Sports Direct company sealed a deal to save it.
The news was broken to delighted staff at the Victoria Street store today sparking wild scenes of joy.
Debbie Eggerton, store manager of Beatties, said: "This is fantastic news and the staff are delighted.
"A huge cheer went up when it was announced and there was some hugs and tears.
"Beatties is the heart of Wolverhampton and it is great that the new owners of House of Fraser are supporting us."
The Express & Star launched a campaign calling on Mr Ashley to keep the store at the heart of the city open.
A dossier was compiled containing a letter from editor Keith Harrison to Mr Ashley along with readers' views.
WATCH tearful staff cheer confirmation of Beatties' future
A spokesperson for House of Fraser said: "As you know, Beatties had been earmarked for closure under the previous owners.
"However, we are pleased to confirm that we have now agreed new terms with the landlord in order to keep the store open.
"We would like to thank Express & Star readers for their support, along with all others who have campaigned to save the store.
"We look forward to continuing to welcome customers to House of Fraser at Beatties in Wolverhampton."
Talks have been going on since Mr Ashley bought House of Fraser out of administration for £90 million eight weeks ago.
The store's distinctive uniformed doorman was at his post today, welcoming customers with the good news.
Wolverhampton South East MP Pat McFadden was among the first to celebrate confirmation the store had been saved.
He said: "This is good news for Wolverhampton in terms of both jobs and the city’s identity.
"Beatties is an iconic store in the city with a long history and the news that the closure threat is being lifted will be warmly welcomed."
Today's tremendous news follows months of uncertainty for around 280 Beatties staff and thousands of shoppers across the city and the wider Black Country, for whom the store has held a treasured place for more than a century.
Shoppers reacted with joy today and there were smiles on the faces of all those coming out of the department store, having heard the news.
One customer, John Timmins, aged 77 and from Wolverhampton, said: "This is wonderful. It is just what the city needed. Wolverhampton could not afford to lose Beatties."
Colin Flavell, aged 76 and also from Wolverhampton, added: "Hopefully this will provide a platform for more shops coming to the city centre."
And Mrs Carol Barratt, aged 69, from Wolverhampton, said: "People would stop coming into town if it wasn't for Beatties. You need it as investment is put into a railway station and the extended Metro line."
Janice Smith, aged 56, is also from the city and has her own family connection with the store - one of her relations used to work there. "Beatties is too important to close," she said. "It is a landmark building which must remain open for many years to come."
Claw back customers
Wolverhampton broadcaster Jacqui Oatley, who grew up in Codsall and studied at St Dominic’s in Brewood and Wolverhampton Grammar School, also shared her joy at the announcement.
She said: "I'm delighted about the news. It has been a large concern for Wolverhampton, such an iconic store in the centre of town.
"The thought of it closing was terrible and you wondered what could go in its place.
"News that it is remaining open, although we do not have all the details, is good news also for all the people who work there.
"My memories are of it being a vibrant store, the thought of it closing was upsetting.
"Going forward it has to be viable and so let's hope that they finds ways to keep it sustainable and make people come back into the city.
"The store was a reason to go into the centre.
"I hope that the shop can now claw back some of the customer base and turn the shop into the the magnet it once was."
Britain's Got Talent star Donchez Dacres declared the announcement a 'result'.
Famous for his Wiggle Wine, the 61-year-old from Wolverhampton joined the campaign to save the store.
He said: "I think it is wonderful news for Wolverhampton as a city.
"It is a historic building and part of the jigsaw of the city. It was crucial for it to remain open. I'm delighted."
Wolverhampton Council leader Councillor Roger Lawrence said the authority was delighted with the news.
A dark shadow has loomed over Beatties for months after it was first slated for closure as part of a rescue plan drawn up by the previous House of Fraser bosses, which involved shutting more than half the 59 stores nationwide.
That plan fell apart and the company went into administration on August 10, to be immediately bought by Mr Ashley and his Sports Direct company.
But as time dragged on, fears had grown that the protracted talks with the Beatties landlords would be unsuccessful.
Since the Sports Direct takeover, a string of stores up and down the country had confirmed they would be closing as talks with site owners floundered, although more than 20 stores including the flagship Oxford Street branch were saved.
WATCH more on the campaign to save Beatties
In frustration, Mr Ashley lashed out at "greedy" landlords who were frustrating his plans to create a 'Harrods of the High Street'.
Wolverhampton Council had its own talks with the site owners to discuss possible uses for the vast Beatties site if an agreement could not be struck, although council managing director Tim Johnson said the preferred option was that it remain a House of Fraser department store.
But today the news for Wolverhampton couldn't be better. Beatties will remain at the heart of the city.