The Quebec government and the city have declared much of the city's downtown a tourist zone, and granted permission for businesses in those areas to set their own hours of operation.
The new rules announced on Friday apply to five of the city's most-visited areas.
Some of the areas, such as historic Old Montreal, were already designated tourist areas, but this new measure significantly expands the areas that can be open all night.
Mayor Denis Coderre says the decision came in response to the demands of retailers and customers who wanted greater flexibility in their opening hours.
He says he hopes the five-year experiment will boost Montreal's economy and help retailers stay competitive.
"It will have a major impact on the vitality of our commerces, on the attractiveness and competitiveness of our downtown and on the Montreal economy as a whole," he said in a statement.
Traditionally, Quebec laws on opening hours have been some of the most restrictive in the country. With some exceptions, businesses outside the pharmacy and food and beverage industry are required to close at 9 p.m. on weekdays and 5 p.m. on weekends.
In 2008, the rules were relaxed to allow downtown businesses to stay open until 8 p.m. on weekends, a move the government said was successful.
Coderre's administration has also studied the idea of keeping bars open until 6 a.m, a proposal that was rejected by the province's liquor board last summer.
Some downtown retail owners and workers, however, were less than enthusiastic. Several told The Canadian Press they didn't plan to extend their hours, saying it would be too expensive and employees don't want to work in the middle of the night.
"Just paying employees and the electric bill would be too expensive," said Karima Ben Ami, who manages a downtown souvenir shop.
She said businesses would be better served by measures such as reducing taxes, lowering the cost of parking and shortening the endless construction projects that clog up the city's downtown.
"We're not New York," she said. "Just look at all the empty storefronts."
Others were more enthusiastic. One man said that although he didn't plan to extend his hours, he was happy other owners would not incur fines for staying open late.
Therese Taouil, an employee at a men's clothing store, was all smiles when told the news. She said there were many customers who might like to shop late in the summer.
"We have a lot of tourists here. I say let's try it," she said. "Why not?"