The IMF said the approval of the four-year loan program allowed the immediate disbursement of 1.65 billion euros ($A2.06 billion) to Athens.
"Greece has made tremendous efforts to implement wide-ranging painful measures over the past two years, in the midst of a deep economic recession and a difficult social environment," IMF managing director Christine Lagarde said in a statement.
"However, the challenges confronting Greece remain significant, with a large competitiveness gap, a high level of public debt, and an undercapitalised banking system."
The new Fund-supported program "will enable Greece to address these challenges while remaining in the eurozone," she said.
Lagarde highlighted that the Greek authorities were "fully committed" to the program objectives and "stand ready to take any additional measures as may be necessary."
"Greece's priority is to undertake competitiveness-enhancing structural reforms," she said.
But, Lagarde warned, "risks to the program remain exceptionally high, and there is no room for slippages.
"Full and timely implementation of the planned adjustment -- alongside broad-based public support and support from Greece's European partners -- will be critical to success."
Despite some misgivings among members over the Fund pouring more money into troubled Greece and Europe, and worries that Greece's fractious politics might impede progress in restructuring its finances, executive board's loan approval had been expected.
After keeping its plans secret for weeks until the EU and Athens could complete a massive 107 billion euro private sector debt writeoff, last Friday Lagarde announced the larger-than-expected 28 billion euro proposal.
The type of loan, an extended fund facility, is used to support member countries suffering long-standing structural problems.
The four-year version of the EFF was freshly minted by the board, which approved extending the maximum time frame from three years Wednesday, just in time for the Greek loan approval.
The IMF said it would disburse the 28 billion euros in equal tranches over the four-year period.
The IMF was disappointed by Greece's progress under its previous 30 billion euro loan, called a stand-by arrangement, which was part of a huge IMF-EU bailout in May 2010 that failed to get Athens's finances on a sustainable path.
The IMF disbursed 20.3 billion euros of that loan. The rest has been cancelled to make way for the new loan program.
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