The city voted 21-3 in favour of the plan to refurbish Frank Clair Stadium and add new retail and residential developments to the park.
"Today's positive City of Ottawa council vote means a beautiful new stadium and as early as 2014, a proud new franchise that will make its community proud and our league even stronger," CFL commissioner Mark Cohon said in a statement.
"This is a great day for our league and, for all of us who understand its important place in the culture of Canada, a great day for our country."
The league said that as long as stadium construction remains on schedule, Ottawa will be eligible to select four underclassmen from the NCAA in the 2013 CFL Canadian draft, while an expansion draft will be held in December 2013.
Ottawa will be eligible to have a representative join the league's board of governors and fully participate in the CFL Canadian draft in 2014.
The $300-million project has faced a series of legal challenges. The final hurdle was cleared Aug. 29, when the Court of Appeal for Ontario ruled against the Lansdowne Park Conservancy, a group opposed to the redevelopment plans.
The group had argued in a lower court back in April that the city had committed an abuse of practice when it awarded the project to the Ottawa Sports and Entertainment Group.
An appeal by a group called the Friends of Lansdowne was also dismissed that month by Ontario's highest court. That group had argued that the city acted in bad faith when it approved the project, and had broken dozens of municipal bylaws.
Football has a long history in Ottawa. The Rough Riders were founded in 1876 and won nine Grey Cups. The team played in the CFL from 1958 to 1996 before folding after a succession of losing seasons and mismanagement.
The CFL returned to Ottawa in 2002 with the expansion Renegades, but the franchise only lasted four seasons before the league suspended operations in the spring of 2006.