The Senate voted 56-26 to approve the confirmation, with 11 Republicans joining Democrats in voting for Yellen, Xinhua reported.
Yellen, currently the Fed's vice chair, would become the first woman to take the helm of the US central bank in its 100-year history.
She was nominated by US President Barack Obama for the post in October and would be the first Democrat to serve the job since 1987.
Born in 1946, Yellen has been vice chair of the Fed since 2010. She is considered an influential architect of the Fed's extraordinary measures to revive the economy through clearer policy communication and large-scale asset purchases after the interest rates were reduced to near zero in late 2008.
In her recent remarks, Yellen voiced concerns about high unemployment and spoke in favour of the Fed's bond-buying programme as a way to stimulate the economy.
The widely-scrutinised Fed's policy shift comes at a delicate moment when the US central bank had just begun gradually normalising its monetary policy after a string of data pointed to a better-than-expected growth rate and steady improvement in the labour market.
In December, the Fed announced that it would start in January tapering its purchases of treasury and mortgage-backed debt to a pace of $75 billion a month from $85 billion a month.
--IANS (Posted on 07-01-2014)