The IOC said it had started reviewing the Kosovo file five years ago, a year after the region declared independence from Serbia in 2008.
This came almost a decade after NATO went to war to halt the massacre and expulsion of Albanians by Serbian forces waging a two-year counter-insurgency under late strongman Slobodan Milosevic.
"It was a very complicated situation," said Sheikh Ahmad Al-Fahad Al-Sabah, head of the Association of National Olympic Committees. "I am proud that now there will be 2005 NOCs (in the IOC).
Belgrade refuses to recognize Kosovo, saying the territory, which has a majority Albanian population, is a heartland of the Serbian nation and the country's Olympic committee launched a protest in October when Kosovo was granted provisional IOC recognition.
Kosovo Prime Minister Hashim Thaci welcomed the news in Pristina and even revealed the name of the team's flag bearer in Rio.
"Congratulations Kosovo and all athletes," Thaci said on his Facebook page. "Our flag will wave at the Olympic Games in Rio and will be held by (judo champion) Majlinda (Kelmendi)."
Kosovo, which will also compete in the inaugural European Games in Baku, Azerbaijan next year, is recognized as a country by 108 of the 193 UN Member States.
Kosovo's Olympic Committee was formed in 1992 with more than 30 affiliated national federations, 13 of which are Olympic sports federations.
Six of those -- table tennis, archery, judo, sailing, weightlifting, and modern pentathlon -- are full members of their respective international federations.
Olympic membership through a national Olympic Committee allows athletes to compete in the summer and winter Games while also accessing IOC funds for the development of sport in their region.
Although IOC recognition usually is preceded by United Nations recognition of the state, it is not a prerequisite.
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