Plans to develop the land at Whitefriars stalled almost a decade ago after an archaeological dig uncovered human remains.
An investigation established the land was once the Carmelite Friary of Tullilum, founded in 1262.
More than 330 skeletons were recovered during four years of excavations.
Now Perth and Kinross Council has finally granted owner Manorgate permission to build two retail units on the site.
Glasgow-based Manorgate took over the plot at the corner of Whitefriars Road in 2006 unaware of the site’s historic significance. They later sued a legal company acting for site sellers First Scottish Property Services for failing to tell them about a need for an excavation and were awarded damages of £680,000.
Perth and Kinross Council planning officer John Williamson said: “The site is considered to be a significant and important one in terms of revealing information about the lives of the Carmelite friars.”
He said a planning condition would allow the Perth and Kinross Heritage Trust (PKHT) to access the site and observe construction work.
PKHT has also been given assurances no construction will start until a final archaeological investigation is carried out.
Trust heritage officer Sarah Winslow said: “The Carmelite Friary of Tullilum was founded in 1262 and is thought to be the first Whitefriars house in Scotland, although ten other friaries followed in subsequent centuries.
“The Carmelite Friary was one of six religious houses based in Perth, indicating its status as one of Scotland’s leading burghs in the medieval period.”
Documents suggest the friary became the most important Episcopal residence of the Bishop of Dunkeld in the early 1500s.
Ms Winslow said digs in 2008 and between 2014-17 had revealed parts of the friary, its church and the skeletal remains of at least 330 people.
She said: “This archaeological project will reveal important information about the lives of the Carmelite friars and the people of Perth through the study of architectural remains, archaeological deposits and, most significantly, the physical remains of the people themselves.
“Given the significance of the site and the scale of the post-excavation work to be completed, PKHT has recommended a staged approach to ensure progress is made prior to additional fieldwork.”