Those weighing 100,000 tonnes or more will have to use the less glamorous industrial port of Marghera, which is a long way from Venice's famous Grand Canal.
Venice mayor Luigi Brugnaro said the plan, which has been agreed by an Italian governmental committee, answered both the demands of residents, tourism businesses and conservation groups concerned about damaged to the city's shallow lagoon and canals.
"We want it to be clear to UNESCO and the whole world that we have a solution," Brugnaro said after the meeting of the governmental committee.
"This takes into account all the jobs created by the cruise industry, which we absolutely couldn't afford to lose, and we can start to work seriously on planning cruises."
Work needs to be done on the new route before it is ready to take large cruise ships, but this is expected to be complete within four years.
Ships weighing more than 96,000 tonnes were banned from the Giudecca canal in 2013 and the number of smaller ships was capped at five a day, but that legislation was overturned almost two years ago.