Lawmakers in Berlin's glass-domed Reichstag voted 364-315 with nine abstentions for Angela Merkel who was then to be formally appointed by President Frank-Walter Steinmeier.
Germany's Foreign Minister Sigmar Gabriel said on Thursday he would not join Chancellor Angela Merkel's coalition government, opening the way for a new SPD figure in the high-profile post.
Chancellor Angela Merkel on Sunday vowed to work with the Social Democrats for the "good of Germany" as the centre-left party agreed to join her new coalition.
Members of Germany's Social Democrats (SPD) voted in favour of a coalition with Chancellor Angela Merkel's conservatives on Sunday, opening the way to a new government for Europe's largest economy.
Angela Merkel said: "The killing of children, the destruction of hospitals -- all that amounts to a massacre that must be condemned and which must be countered with a clear no".
German Chancellor Angela Merkel said the country's top parties still had "big obstacles" to surmount before reaching a new coalition deal, ahead of a final round of negotiations on Thursday.
Angela Merkel is battling to form a government more than three months after general elections handed her a win but without a majority.
At several rallies, particularly in eastern states such as Saxony and Saxony-Anhalt, protesters -- many holding campaign posters for the populist AfD party or the far-right NPD, have loudly booed or chanted slogans against Merkel.
Turkish President Recep Tayyip Erdogan stepped into Germany's election campaign on Friday, calling on ethnic Turks not to vote next month for the two parties in Chancellor Angela Merkel's ruling grand coalition.
Prince William and his wife Kate met German Chancellor Angela Merkel on Wednesday on a tour that media saw as an effort to shore up relations with EU countries before Britain leaves the bloc.