Its Planning Committee (below) approved energy company Third Way's application by seven votes to four.
It means Third Way could become the first company to drill for gas since a ban on fracking was lifted by the government in 2012.
The decision could now pave the way for other councils to approve fracking in their areas.
Hundreds of protestors (below) gathered nearby and booed the decision as it was announced.
Critics argue fracking causes earth tremors, can poison water supplies and continues damaging the environment via the use of fossil fuels.
Supporters argue that fracking generates energy, money and jobs, and that it can be done safely.
Andy Lester, from A Rocha, told Premier: "It was very clear that, bar a few landowners and a few local farmers who were going to make money out allowing fracking under their land, the vast majority of the wider community were firmly opposed to fracking."
Speaking about the current government which lifted the fracking ban, he added: "You can't on the one hand say 'we're going to be a leader on climate change' and on the other hand see fracking as a solution to our energy crisis.
"The prayer really is that the government wakes up to the fact it can't play both sides.
"There are alternatives. This not one of them. This is a dark day for Britain's environment and Britain's energy sector."
Richard Flinton, North Yorkshire Council's Chief Executive, said: "This has been a very difficult decision for the Council to make and we know it is a difficult decision for the people of this county.
"We are proud of our beautiful county which attracts so many visitors and maintains a thriving tourism industry.
"We have no intention of jeopardising those qualities and our rural industries and livelihoods.
"For that reason the planning conditions must be fully discharged and monitored."
Listen to Premier's Aaron James speaking to Andy Lester:
