Oxford City Council's executive board agreed BMW could build on its land in Cowley, and that it will relocate leisure facilities currently on site.
The 24-acre land is currently home to the Oxford Sports and Social Club, Oxford Cricket Club, and Oxford United's training ground.
The expansion proposals are still subject to planning permission.
The council said the new facility would include replacement football and cricket pitches, a classroom and a gym.
It intends for the existing facilities used by the football club to remain in use until their replacement is ready.
More than 2.5m cars have been made at the plant since BMW took over in 2001.
Oxford United is already looking for an alternative location for its training grounds.
When Oxford Sports and Social Club closes it will be the last of the old motor manufacturing social clubs to go, but its lease ends in March, and its owners aren't looking to carry on.
A spokesman from Oxford Cricket Club told me they've effectively been evicted from the site - they played their very last game there on Saturday.
He said they were disappointed not to have been involved in any discussions.
The Mini car plant in Oxford is to expand as part of a £4.9m deal with the city's authority.