The Queensland state project was approved subject to "36 of the strictest conditions in Australian history", Environment Minister Greg Hunt said.
Read: Australia court blocks huge India-backed coal mine
It came two months after the Federal Court blocked the development, largely in relation to its impact on two vulnerable reptiles -- the lizard-like yakka skink and the ornamental snake.
"The rigorous conditions will protect threatened species and provide long-term benefits for the environment through the development of an offset package," Hunt said in a statement.
"These measures must be approved by myself before mining can start," he added, noting that he had the power to suspend or revoke the approval and impose penalties if there was a breach of conditions.
Adani, which is in the fifth year of development and approvals for the huge project, welcomed the decision and the "rigorous and painstaking conditions".
"Today's announcement of the final federal approval for the Carmichael Mine and North Galilee Basin Rail by Minister Hunt makes clear that these (conservation) concerns have been addressed, reflected in rigorous and painstaking conditions," the company said in a statement.
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Despite the conditions, the Mackay Conservation Group -- which brought the legal challenge to the Federal Court -- said the approval "risks threatened species, precious groundwater, the global climate and taxpayers' money".
"Minister Hunt has again failed the people of Australia by ignoring new evidence on the devastating impacts of what would be Australia's largest coal mine," the group's co-ordinator Ellen Roberts said.
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