Councillors on the South Planning Applications Committee approved the application to convert a steading at Culchunaig this afternoon (Tuesday).
The site sits south west of the visitor centre owned by National Trust for Scotland and the portion of battlefield managed by the organisation.
Of a number of recent applications for the Culloden area, it is the one closest to the NTS property and overlooks the battlefield.
Historians opposed to the development earlier criticised it as an "appalling intrusion of a national war grave" with the site likely to have seen significant action during the battle in April 1746.
National Trust for Scotland and Historic Environment Scotland did not object to the proposals on the grounds they redeveloped an existing building, although both organisations recognised the sensitive nature of the site.
The application amends and earlier proposal approved for the site in 2015, before the advent of the Culloden Muir Conservation Area, which was set up to protect the sensitive area from inappropriate development.
Councillor Andrew Jarvie (Conservative), of Inverness South ward, told the meeting: "The position of Historic Environment Scotland and National Trust for Scotland is completely inadequate.
"They have taken into account only the national policy - there is no reference whatsoever to the Culloden Muir Conservation Area. They have completely missed out the policy for development in this area.
"One of the purposes of the policy is to enhance the battlefield area. I am struggling to see how this can be the case here when it is so close to boundary fence, opposite the visitor centre."
Councillor Jarvie did not proceed with a planned amendment to refuse the application after advice was taken from planning officers.
It is understood that, given the original planning permission was approved, any costly legal challenge by the council now would be less likely to succeed.
Councillor Ron MacWilliam (SNP), of Inverness Ness-Side, told the meeting: "This application may has well have not been on the agenda."
He said that it was "not an acceptable state of play" that any refusal now would open up the council to legal bills and challenges.
Councillor MacWilliam added: "In the future, my own efforts will be ramped up to protect this site from further development."
Planning officials at Highland council earlier recommended that councillors approve 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."
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 later added: ""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."
A full archaeological assessment of the ground must be completed before work begins.