The project is described as the largest in the area in decades, and could produce upwards of 180,000 barrels of oil per day over the next 30 years.
But at the same time, the emissions would be equivalent to two million new exhaust cars, according to authority calculations quoted by the BBC, and the project has received strong criticism from several environmental organizations.
The decision also goes against Joe Biden's campaign promise not to approve new gas and oil ventures on federal land.
However, he has inherited the Willow project from representative Donald Trump, who approved the plans - which were then temporarily stopped by a court.
However, the last word has not yet been said on the matter.
- I see court proceedings as very likely, said Jeremy Lieb, lawyer at the organization Earthjustice, this weekend.
Those in favor of the project, including Alaska's representatives in Congress and parts of the indigenous population, say it could create 2,500 new jobs.
The advocates also claim that the oil can generate revenues of 17 billion dollars, equivalent to 180 million kroner, and ensure that the country can continue to be self-sufficient in energy.