Ottawa had until midnight Friday, the three-month anniversary of Meng's arrest, to decide whether to approve the proceedings.
People leave the court registry after the BC Supreme Court bail hearing of Huawei CFO Meng Wanzhou, who was released on a 10 million Canadian dollar bail in Vancouver, British Columbia, Canada, December 11, 2018.
Meng, Huawei's chief financial officer and the daughter of company founder Ren Zhengfei, was changing planes in Vancouver in December when she was detained at Washington's request on suspicion of violating U.S. sanctions on Iran. She was detained while changing planes in Vancouver.
"An authority to proceed" is the first step in the extradition process, with Meng now set to appear in court on March 6, where a date will be set for her extradition hearing.
The issue of Meng Wanzhou's potential extradition is very sticky for Canada in regard to its worldwide relations with both China and the USA. "We greatly appreciate Canada's steadfast commitment to the rule of law", she said in a statement.
Legal experts had predicted Ottawa would give the go-ahead, given the close judicial relationship between Canada and the US.
Ms Meng was arrested in Canada in December at the behest of the US.
A Reuters report suggests that the case will likely be determined by the Federal Justice Minister, should the appeal process brings the decision to his desk.
China's embassy said it was "utterly dissatisfied".
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Lu Kang made the comments after being asked whether he thought the Trudeau government was taking an inconsistent approach in the cases of Meng and SNC-Lavalin. China had demanded that the USA drop its request.
Last week Mr Trump played down the idea of dropping the charges.
Nine days after Meng's arrest, the Chinese authorities detained two Canadians in what was widely seen as an act of retaliation.
Not long after, two Canadians in China were arrested on vague security charges.
"They're not going to take this lying down. one shudders to think what the consequences could be", he told the Canadian Broadcasting Corp, saying Beijing might crack down on Canadian canola shipments or stop Chinese students from going to Canada.
Ottawa has rejected Chinese calls to release Meng, saying it can not interfere with the judiciary.
Officials say they've carried out a "thorough and diligent review of the evidence" in the case, and that the requirements to proceed have been met. It is nearly certain that if as a result of the Canadian action, Meng is ultimately extradited from Canada to face prosecution in the United States, it will sink bilateral relations to the bottom. The Canadian minister of justice has the final say on whether Meng will be handed over to the US.
Huawei was not immediately available for comment.
"This is not a merely judicial case, but a political persecution against a Chinese high-tech enterprise", the embassy said.