The 80ft (24.3m) structure will be located on a raised part of the seafront in Redcar, at the site of the former Leos night club.
It will have a viewing platform, a studio, galleries and a cafe.
Work is due to start on the town's sea defences in early 2011, and the construction of the vertical pier is set to begin in the autumn.
Councillor Sheelagh Clarke, cabinet member for culture, leisure and tourism, said: "The public told us that they wanted to see unique attractions in Redcar that do not replicate those of other resorts.
"The vertical pier will create a point of interest to attract people to Redcar and re-ignite interest in the town as a place to visit."
Plans for a vertical pier in a Teesside coastal town have been given the go-ahead by council planners.