A list of GM products is awaiting EU approval and Tuesday's vote in the European parliament opens the way for the authorities to review it.
EU member states will be able to opt out of any eventual GM approvals, but environment campaigners said the new law was not robust enough.
Some figures in the GM industry were also unhappy, complaining that the compromise meant countries would be able to reject GM crops for unscientific reasons.
Widely-grown in the Americas and Asia, GM crops in Europe have divided opinion. Many countries, including France and Germany, oppose them, while others, like Britain, favors them.
An earlier attempt to agree a compromise on GM cultivation failed in 2012.
Tuesday's vote in the parliament in Strasbourg is almost the final stage in the legislative process. The plan will become law once it has been signed off by member states and published officially, which is expected in the coming weeks.
Vytenis Andriukaitis, European commissioner for health and food safety, welcomed the outcome.
"The agreement meets member states' consistent calls since 2009 to have the final say on whether or not GMOs can be cultivated on their territory," he said.
EU authorities have approved only two GM crops for commercial cultivation so far. Of those, one was later blocked by one of the EU's top courts, which found EU authorities had failed to follow the rules when they approved it.
Industry body EuropaBio, which represents companies such as Syngenta and Monsanto, argued that the compromise deal sent a negative signal to industries considering investing in Europe.
"This is a stop sign for innovation in Europe," said Jeff Rowe, chairman of EuropaBio's Agri-Food Council.
However, Bart Staes, who represents Green politicians in the European Parliament, said the Greens had voted against the accord because it would ease the way for GM crops in Europe.
"Countries opposed to GMOs are given the carrot of being able to opt-out of these authorizations, but the scheme approved today fails to give them a legally-watertight basis for doing so. This is a false solution," he said.
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