Town of Monroe officials voted 4-1 to approve a request by the village of Kiryas Joel to annex 164 acres of town-owned land.
The town board denied a broader request that would have granted the ultra-Orthodox Jewish community up to 507 acres.
The controversial vote comes after years of fighting on both sides of the issue.
Hundreds of people had marched earlier in the day in protest of the vote, and onlookers on both sides of the issue filled the meeting place to capacity.
Kiryas Joel leaders have long sought to expand the size of the village, but residents of the surrounding suburbs say they fear the expansion will lead to increased traffic and strains on the public schools.