The board of the Tarrant Regional Water District on Tuesday approved the deal. The Dallas City Council approved the agreement last week.
Board members approved a financing agreement with Dallas for the 149-mile pipeline from Lake Palestine to Benbrook Lake.
The Fort Worth Star-Telegram reports the board also approved paying $16.3 million to five contractors for engineering work on nearly 95 miles of the pipeline.
Construction could begin by 2013, with the goal of having the water available by 2018.
Water district planning director Wayne Owen said the work serves as a blueprint for cooperation on future projects.