The province asked for the criminal code exemption after overdoses claimed more than two thousand lives in BC last year.
This time-limited three-year trial is the first of its kind in Canada.
Adults will be allowed to possess a combined total of 2.5 grams of opioids, cocaine, methamphetamine and MDMA.
While those substances will remain illegal, adults found in possession for personal use will not be arrested, charged or have their drugs seized. Instead, they will be offered information on available health and social services.
In its request to the federal government last year, BC said it asked for the drug laws exemption in order "to remove the shame that often prevents people from reaching out for life-saving help".
Federal minister of mental health and addictions Carolyn Bennett said on Tuesday that "for too many years, the ideological opposition to harm reduction has cost lives".
"We are doing this to save lives, but also to give people using drugs their dignity and choices."
Vancouver mayor Kennedy Stewart said the decision "marks a fundamental rethinking of drug policy that favours healthcare over handcuffs".
The programme will run from 31 January 2023 to 31 January 2026. There are some exemptions to the scheme, which will not apply to primary and secondary school grounds, child-care facilities, airports, or to members of Canada's military.