He also promised to call the governor of Nebraska to help the company secure the necessary construction permits.
Barack Obama blocked the project, first proposed in 2008, over environmental concerns, but Trump says the pipeline will create thousands of jobs and provide affordable energy.
During the US presidential campaign, Trump repeatedly promised to approve the pipeline, and one of his first acts after taking office in January was to give a conditional go-ahead for the cross-border project.
It is all part of his plan to boost the economy, improve infrastructure, slash regulations and reduce government interference he says is hindering business.
But the jobs promise is subject to dispute. The State Department estimated the US-portion of the pipeline would create 42,000 temporary jobs over a two-year construction period, but opponents note that less than 50 permanent jobs would be created for pipeline maintenance.
Keystone XL is an expansion of TransCanada's existing system to funnel bitumen from Alberta's oil sands to refineries on the US Gulf Coast. The portion blocked by the Obama administration was a $5.3 billion proposal to build a 1,180-mile (1,900 kilometer) pipeline to Nebraska, with some 870 miles winding through the United States, which would carry 830,000 barrels of oil per day.
After a new US review of the project, Under Secretary of State Thomas Shannon issued the presidential permit, concluding that it would "serve the national interest," the State Department said Friday.
TransCanada thanked the US administration for reviewing and approving the delayed project.
"This is a significant milestone for the Keystone XL project," said TransCanada president and chief executive officer Russ Girling, who was with Trump at the White House.
The company looks forward to working with the White House "as we continue to invest in and strengthen North America's energy infrastructure," he said in a statement.
The company has a total of $15 billion in investment in oil and natural gas "that will create thousands of well-paying jobs and generate substantial economic benefits across the US."
But TransCanada still will need to work with authorities and residents to obtain the necessary permits and approvals for construction in Nebraska, Montana and South Dakota, the company said.
Protestors supporting the Standing Rock Sioux Native American tribe for many months blocked completion of a section of the Dakota Access pipeline in North Dakota, until the Trump administration overrode their environmental concerns and approved the construction.
Environmental groups immediately expressed outrage at the Keystone XL approval and vowed to continue to fight the project, so the company could face obstacles at the state and local level.