For Meng, the daughter of Huawei's billionaire founder Ren Zhengfei, the decision sets in motion a process that could drag on for months and possibly years.
Canada says it will allow an extradition hearing to proceed against the chief financial officer of China's Huawei Technologies, paving the way for a legal battle that could complicate the Canadian and US relationships with China.
Canada has approved extradition proceedings against the chief financial officer of Huawei Technologies, prompting a furious reaction from China.
The statement comes in the wake of Canada paving the way for a hearing to extradite Meng to the United States, where she is sought for allegedly violating sanctions imposed by Washington on Iran.
Meng, who is chief financial officer for China's Huawei Technologies, was arrested at Vancouver's airport on December 1 on USA charges related to alleged violations of US sanctions law, setting off an ongoing diplomatic dispute.
Canada's Department of Justice issued a formal "authority to proceed" after reviewing the USA request that Meng be handed over to face fraud charges, according to a statement Friday.
Her firm's also accused by the U.S. of stealing trade secrets from T-Mobile.
If she is extradited from Canada, Ms Meng could face prosecution in the US.
Meng, who is now under house arrest, will appear in court on March 6 in Vancouver.
Canadian Department of Justice officials issued a statement saying they diligently reviewed the evidence and the case can go ahead. It's likely the final decision will eventually be made by a federal justice minister.
USA regarded Huawei as a potential threat to national security President Trump is expected to issue an order that will limit that sales of Huawei 5G equipment within the United States shortly.
Meng will sit for an extradition hearing in Canada on March 6, during which the evidence will be entered into the public record.
While the hearing authority handed out on Friday could prompt the beginning of extradition procedures, experts pointed out that it could take a lot of time before Meng is delivered to the United States.
The statement, signed by David J. Martin, continued by saying the defence is also concerned the minister gave his approval even though the acts the USA wants to try Meng for would not be an offence in Canada.
China also sentenced another Canadian, Robert Lloyd Schellenberg, to death in a sudden retrial of his drug-smuggling case.
Meng's lawyer David Martin has also cried foul at the decision, arguing that the charges against the Chinese executive were viewed by the US as a political tool to break an impasse in the China-US trade row.
Meng was arrested in December by Canadian officials at the request of the US.
Ms Meng and the company have denied any wrongdoing.