Planners at Highland Council said the steading conversion at Culchunaig, which will feature a hot tub, zen garden, fire pit and gaming and chill out zone, could be built subject to conditions.
It has been recommended that councillors approve the plans when they come before committee next week.
The development, the latest in several applications to develop land at Culloden, sits south west to the part of the battlefield and visitor centre owned by National Trust for Scotland and is the closet one yet to its property.
Historians say that the Culchunaig area saw 'major action' on the Jacobite right wing during the battle in April 1746 and was the scene of the last fight of 'legendary' Culloden hero Gillies MacBain, who led the Mackenzies on the field and single-handedly killed 13 government soldiers.
Dr Christopher Duffy, of the Historians' Council on Culloden, in his objection to the proposal, said: "To build a large modern intrusive luxury villa in place of the traditional stone steading which now occupies this land would be an appalling intrusion on this national war grave."
He added today: "There is indeed evidence that Culchunaig played a major role in the battle, that there were fatalities all around the area, the mortal remains whom were not carried to the pit graved and have been found there every since, and that the entire area to the south and southwest of the current NTS property played a critically important part in the battle and its aftermath, including the famous last fight of the legendary hero of the battle, Gillies MacBain.
"The Historians' Council on Culloden maintains that this area contains far too much critical information and remains of the battle and its immediate aftermath, in addition to valuable pre-historic material, to allow its destruction."
Officials approved the plans given they represented a "sensitive approach to the redevelopment of a traditional building in an area of high cultural and historic significance".
A report added: "Thanks to its sympathetic design and use of high quality materials, the development will retain much of its historic character while bringing the traditional building back into active use, without impacting upon the ability to understand and appreciate Culloden Battlefield."
Councillors will take a final decision on the application at a meeting on Tuesday, September 17.
The site sits within both the Inventory of Culloden Battlefield, which maps out the area of the encounter between Jacobites and Government forces on April 16 1746, as well as the Culloden Muir Conservation Area, which was drawn up in 2015 to guide development surrounding the sensitive site.
Historic Environment Scotland described Culchunaig as a 'sensitive part' of the battlefield where it was highly likely that artefacts and possibly human remains could be found.
It did not object to the the proposal but called for a full archaeological assessment of the land.
It said that, because the conversion stuck within the existing footprint and plot, it was "unlikely ...this would result in a significant change to the character of this part of the battlefield".
It said any impact of the development could likely be mitigated, and therefore the organisation did not object to the new home.
The site is thought to have been relatively close to Jacobite lines at the start of the battle and even closer to the scene of a flanking manoeuvre by Government troops.
It is possible that defensive fighting by the Jacobites towards the end of the battle was staged in the area of development.
The proposed development area can be viewed across the battlefield.
National Trust for Scotland said it aspired to open up views across the landscape to help understanding of the battle.
However, it added that the "redevelopment of this dilapidated farm steading on the battlefield could be appropriate, subject to a number of key historical assessments".
It said a full archaeological survey and Historic Building Survey should be carried out at the site before any building work takes place.
The Group to Stop Development at Culloden has reacted furiously to the decision by planning officials to approve the application,
Dr David Learmonth said: "This thoughtless logic, restricted to interpretation of standard 'planning considerations' in 'normal circumstances' is abhorrent, immoral and ultimately disastrous in the context of preservation of one of Scotland’s historic battlefields, of national and international importance."
The group condemned Historic Environment Scotland for not objecting to the plans.