A planning committee gave the go ahead to develop the mixed-use development during a meeting on 10 December.
The 14-acre project is being delivered by Galliard Homes and will be built on brownfield land located off Plough Lane.
It will include 602 homes, retail space, a squash and fitness club, car and cycle parking.
Proposals for the project have been designed by architect Sheppard Robson, while Wilson Owens designed the new 20,000-seater football stadium.
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Galliard Homes Director Mike Watson said: "We are delighted to have received planning permission to redevelop this important brownfield site.
"Alongside AFC Wimbledon's new stadium, we will be providing 602 new high quality homes, a new squash and fitness facility and a retail unit.
"These new homes will make a significant contribution towards Merton's own minimum 10 year target for new homes and the regeneration of this part of Merton.
Council Leader, Stephen Alambritis, said: "This is an important proposal which our very experienced planning officers have been looking into in detail over a number of months. We have always said this site should be for sporting intensification.
"Our independent planning committee has taken into account all the planning issues that are relevant.
"It is now for the Mayor of London to make his decision."
(LM)
