The Five Ways Inn on Himley Road is set to be converted into seven flats under a scheme signed off by planners at Dudley Council.
It will see a two-storey extension added to the existing building, with the development also set to include nine car parking spaces.
No closure date has been set for the pub, which still draws a decent crowd and has been the subject of failed attempts for redevelopment in the past.
Gornal councillor David Stanley, the authority's cabinet member for regeneration and enterprise, said the pub's closure would mark a sad day for the area.
"It is always a sad day to see the loss of these pubs," he said. "In my life I have seen so many of them close down in Gornal, and just recently we have seen the demise of the Fiddler's Arms [which is set to be replaced by flats].
"The Five Ways has been there for years and is seen as a community pub and a meeting place.
"It is still used regularly and it is particularly sad that it is closing when it appears to be a profitable concern."
Agreeing to the development subject to conditions, planners at Dudley Council said: "The proposed development is acceptable in terms of scale, size and appearance and would not have a detrimental impact on surrounding amenity, or result in the loss of an irreplaceable community asset."
A statement Affordable Home Designs on behalf of the developer, said: "It is intended to keep as much of the existing character as possible and incorporate the existing design and features into the new scheme.
"It is considered that this proposed development in this location is well designed, sustainable and appropriate for the site to enhance the character and appearance of the local context."
Three objections were lodged against the scheme. They included one saying the area had lost 20 pubs in the last quarter of a century.