Jacob Asset Management’s scheme will see the old Prince of Wales, on Walsall Road, turned into flats – with two on the ground floor and three on the first.
The pub, built in the 19th Century, was put on the market last year after efforts to lease it to a new tenant had failed.
Developers said declining pub business – not least because of nearby competition from other venues – and a need for more residential property in the area were the main reasons behind the new scheme.
This proposal was submitted in October last year before Walsall Council planning officers finally granted permission earlier this week.
In their application, the developers said: “The property was previously used as a pub, however previous years have seen decrease in trade and increase in brewery and business rates.
“It is therefore not a viable option to keep the pub open due to its operating at a loss.
“Due to the close proximity of Darlaston town centre, which in previous years has seen an increase in development, many of the customers now visit pubs there.
“The pub is also located within a residential estate but doesn’t get much local trade.
“Previous owners have tried to refurbish and lease the pub out for a number of years, but only minimal interest was received with no offers coming forward. Following this the brewery decided to dispose of the site.
“The new vendor is seeking a longer-term solution for the building and it's felt meeting the demand for local housing will secure the future of the building.
“The local area is growing, with student intake increasing on a yearly basis and smaller studio apartments required within the local area.”