Castell Developments is to renovate and extend grade 1-listed Gwrych Castle as a 75-room hotel after receiving planning permission from Conwy County Council.
Conservation architect, Donald Insall Associates, designed the project which includes a 50-room extension shaped as a terraced garden.
Cadw, the Welsh Government's heritage watchdog, said: "It is Cadw's view that these proposals would have a long-term beneficial effect … through sympathetic design, restoration and enhancement."
Gwrych Castle sits to the north of the A55 coast on a wooded hill overlooking the Irish Sea near Abergele. It was built by the Lloyd Hesketh family in the 19th century but since moving into other ownerships has declined and today stands only as a ruined shell. Castell Developments acquired Gwrych Castle in 2010.
Jason Sanderson, chief executive of Castell Developments, based in Colwyn Bay, said: "Even though this is an immensely challenging project it is a labour of love for all involved. There's no question that Gwrych should be saved, it is an outstanding building.
"The most difficult aspect has been to adapt the existing building to meet the requirements of a 21st-century hotel."
Tony Barton, deputy chairman of Donald Insall Associates, said "Castell Gwrych is a prominent, impressive and important site. It appears to be a vast fortress, but is in fact a relatively modest house with extensive false battlements and towers. Its limited floor space and topography posed a real challenge especially as the building's principal value lies in its dramatic relationship with the landscape. We have taken full advantage of the steep slopes to integrate the extensions into the historic setting and to celebrate and enhance Gwrych Castle's special character."
The hotel is scheduled to open in 2015.