The Blacksmiths — a bar and restaurant — on Selsey Road, Donnington is set to become a residential dwelling after Chichester District Council approved Smith Simmons and Partners' application.
The council agreed that there was sufficient evidence that there was no longer demand for the pub within the area.
The pub has been closed since mid-March 2020 and has been actively marketed for sale since May 2019.
The grade two listed building was concluded to require less alterations, if it were changed into a private dwelling, than to what would be required if it were changed into another commercial use.
The application stated: "The conversion works have been designed in order to be sympathetic to the listed building and it is considered that the proposed use as a dwelling would ensure the long term preservation and appropriate use of the listed building which is no longer viable in its current use.
"The proposals seek a change of use for the site to a residential dwelling, would not prejudice an existing agricultural operation or cause damage to the fabric of the building of architectural or historic merit.
"Only minor extensions or alterations are proposed to the building and any internal alterations would seek listed building consent and aim to work within the building fabric."
The district council approved the proposals as they concluded that the development would provide a beneficial facility to the local community, and there is provision for new or replacement facilities to meet an identified need in locations which are well related and easily accessible to the settlement or local community.