France is to allow the wolf population to grow from about 360 now to 500 by 2023, despite protests from farmers worried about their livestock.
A new plan announced by the government represents a rise of nearly 40% in the wolf population.
After being eradicated by hunters in the 1930s, the wolf made its way back into France from Italy in the 1990s.
Wolves are listed as a protected species by the Bern Convention that France has signed up to.
Animal rights groups had been pushing for a more radical proposal and accused ministers of lacking political courage.
In a gesture to farmers, the government said that hunters in France would still be allowed to cull 40 wolves this year, the same as in 2017. Up to 10% of the wolf population could be culled every year from 2019, and that proportion could rise to 12% if more frequent wolf attacks were registered.
Almost 12,000 sheep were killed by wolves in France in 2017 and the government has come under strong pressure from farmers in French regions - particularly in the Alps and the Pyrenees.
"We place trust in all of the stakeholders and local lawmakers to calm the debate and enable co-existence over the long-term," Agriculture Minister Stephane Travert and Environment Minister Nicolas Hulot said in a joint statement.
The new plan also envisages that livestock owners will be able to apply for state funds to protect their animals from wolves.
France is not the only Western European country witnessing the return of the wolf.
Last month a wolf was spotted in the Flanders region of northern Belgium for the first time in over a century.
There were an estimated 60 wolf packs living in Germany in 2017, a rise of some 15% on the previous year.