The facility, in the inner-west suburb of St Peters, will provide training each year for up to 4500 Qantas and Jetstar pilots and cabin crew from early 2024.
It will also house training facilities and up to eight flight simulators, including for the recently ordered Airbus A350 and A320 family of planes, the airline said.
Qantas Group CEO Alan Joyce said the airline had trained its pilots and crew in Sydney for more than 50 years and it looked forward to bringing this critical function back to NSW.
Planning Minister Anthony Roberts said the government deemed the proposal state significant and had expedited approvals.
"The NSW government is a proud supporter of Australia's aviation industry, and efforts like this will help strengthen capability and ensures NSW and Sydney remain the country's global travel hub," Mr Roberts said in a statement.
Qantas has apologised after complaints from passengers who have endured delayed and cancelled flights, long queues at airports and lost baggage in recent months.
The airline is hoping to address the problems by scheduling fewer flights and hiring more staff.
It has announced at least 100 workers will be recruited to sort, scan and transport luggage in a bid to improve baggage services.
