The board approval had been widely expected after IMF staff experts earlier in November said that Chinese authorities had taken the steps necessary for the yuan to be called "freely usable", and Lagarde endorsed their recommendation.
Lagarde said the yuan's inclusion in the basket was expected to help China open up further to the world economy.
"The continuation and deepening of these efforts will bring about a more robust international monetary and financial system, which in turn will support the growth and stability of China and the global economy," she said.
IMF members can use the Special Drawing Rights basket to obtain currencies to meet balance-of-payments needs. The Fund also issues its crisis loans -- crucial to struggling economies like Greece -- valued in SDRs.
The yuan's entry into the basket takes effect on October 1, 2016.