FORT Vale Engineering's works in Brunswick Street, Nelson, will be redeveloped as housing.
The company is transferring its operations to the Simonstone Industrial Estate so its 207 staff are on one site.
Members of Pendle Council's Nelson Area Committee have granted Fort Vale outline planning permission for the 1.4 hectare site.
Access to the site will be from Cloverhill Road and the company will put £20,000 towards traffic calming in the area and a children's play area.
Planning officer Stan Healey said: "The replacement of the mill premises at Parkfield with new housing at a lower density than the surrounding area will increase the range and type of housing available in the vicinity and remove an industrial unit from what is essentially a residential area of the town."
Councillor Mohammed Iqbal said: "We welcome the work the company is putting in, particularly the traffic calming and play area."
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