Cherwell District Council have supported the plans, which involve demolishing the existing buildings on the site and redeveloping it to create a 295,000 sq ft shopping park.
The centre will include ten retail and three restaurant/cafe units, including a 100,000 sq ft anchor store which has been pre-let to Marks & Spencer.
The site is currently occupied by motorsport group Prodrive who will relocate to larger premises in Banbury.
Construction is due to start on the new retail park in summer 2013 with practical completion in the second quarter of 2014.
Tim Walton CEO of LXB Manager LLP said: “We are very encouraged by this positive news and now look forward to delivering a thriving retail park investment in this prominent Banbury gateway location.
“We aim to create a destination that will draw shoppers from far afield, as well as increase the number of major retail brands within the town.”