The vote marks a key step toward redeveloping the amusement park property due to current zoning restrictions.
Dozens of residents spoke during public comment before the measure passed after 10 p.m.
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Developer Eustace Mita, who purchased the property in 2021, has proposed building a 252-room luxury hotel called "Icona in Wonderland."
He has said he would preserve the Ferris wheel and carousel, but the plan has faced resistance.
READ MORE | 'It's bittersweet': Hundreds say goodbye to Gillian's Wonderland Pier on its last day
Over the summer, Mita indicated he was open to selling the property after a similar vote failed in August.
"I am so happy for the people of Ocean City. It's a great win that will revitalize the boardwalk for the next five generations," Mita told Action News on Thursday night.
The planning board must still determine whether the site qualifies as "in need of rehabilitation" for the project to move forward. If approval is given, crews could break ground as quickly as six months, the developer said.
Gillian's Wonderland was a fixture on the boardwalk before it closed in 2024 after 94 years in operation.