United States Judge Robert Gerber said in his 95-page ruling late Sunday that the sale was in the best interests of both GM and its creditors, whom he said would otherwise get nothing.
"As nobody can seriously dispute, the only alternative to an immediate sale is liquidation - a disastrous result for GM's creditors, its employees, the suppliers who depend on GM for their own existence, and the communities in which GM operates," Gerber wrote in his ruling.
An appeal is expected.
A Chicago law firm representing people who have sued GM in several auto accident cases filed paperwork Monday saying it would appeal to US District Court in New York.
The deadline to appeal is noon Thursday, after which point Gerber's order takes effect and the sale is free to close.
Attorneys for some of GM's bondholders, unions, consumer groups and individuals with lawsuits against the company have said their needs have been pushed aside in favour of the interests of GM and the government.
Quick exit
GM's government-backed plan for a quick exit from Chapter 11 hinges on the sale, which will allow the automaker to leave behind many of its costs and liabilities.
The US Treasury Department has vowed to cut off funding to GM if the sale doesn't go through by July 10.
The government has said it plans to provide about US$1.18 billion to fund the wind-down process.
Steve Rattner, a top aide to Treasury Secretary Timothy Geithner and the head of the Obama administration's auto taskforce, said the government was "confident that his decision will stand and the sale of GM's assets to new GM will proceed expeditiously."
The ruling comes after a three-day hearing that wrapped up Thursday, during which GM and government officials urged a quick approval of the sale, saying it was needed to keep the automaker from selling itself off piece by piece.
"Now it's our responsibility to fix this business and place the company on a clear path to success without delay," GM CEO Fritz Henderson said in a statement early Monday.
Objections
Last month, a group of bondholders and others took their objections to Chrysler LLC's sale to Fiat Group SpA all the way to the Supreme Court, which declined to rule on them. Still, the proceedings delayed the Auburn Hills, Michigan-based automaker's exit from bankruptcy protection.
Consumer groups have cautioned that people injured by a defective GM product before June 1, when the automaker filed for bankruptcy, would have to seek compensation from the 'old GM', the collection of assets leftover from the sale, where they would be less likely to receive compensation.
The 'old GM', which will be known as Motors Liquidation Co, will include a smattering of properties, several of which are facilities already slated to be closed.
They will be sold to the highest bidder under court supervision.
The old GM will remain an entity until all of the facilities are sold off, a process that could take months or years to complete.
Other assets to be filed under the old GM include brands like Hummer, Saturn and Saab, for which GM has lined up buyers. They also include all current GM common stock, which - despite its active trading on over-the-counter markets - will soon be worthless.
AP