The announcement comes just days before the city's famed annual NYC Pride Rally and celebratory weekend.
The move marks the first time a New York City site has been designated as a landmark primarily for its significance to LGBT history, according to the Landmarks Preservation Commission.
"This is such a win for LGBT New Yorkers and the community around the world," said Stacy Lentz, a co-owner of the Stonewall Inn.
"It's a symbol of fighting against repression and we are thrilled the building will be preserved for generations to come," she said.
Lentz said she hopes the LGBT community will have reason to celebrate a second time this week when the Supreme Court hands down its ruling on nationalizing same-sex marriage.
On June 28, 1969, the Stonewall Inn was raided by police as part of a crackdown on the city's gay clubs. But on that same summer night, members of the LGBT community fought back, ushering in a new phase of the LGBT liberation movement, according to Heritage of Pride, the nonprofit that organizes the city's Pride events.
A 76-year-old man who goes by "Tree" and was at the Stonewall dancing with friends that night said he is ecstatic about the newly granted status.
"Remember, the Stonewall Inn is a mecca for the gay community," Tree said.
"On the night of the rebellion, we were dancing the Lindy Hop, it's like the jitterbug, and the cops came in and everybody started screaming and we all knew it was a raid," Tree said.
Since the protests and demonstrations began on that historic night in 1969, the building has served as a gathering place for the gay community.
"Every year for Pride month it's a major gathering place and it's also the place where people went to celebrate when gay marriage was legalized in New York state," said Karen Loew, director of special projects at the Greenwich Village Society for Historic Preservation.
Loew explained that by granting the building individual landmark status, the exterior of the building won't be allowed to change without Landmarks Preservation Commission approval and review.
"When something is designated an individual landmark it's subjected to a greater amount of scrutiny," she said.
The two buildings that made up the Stonewall Inn were built in the 1840s as stables, and in 1930 were merged, according to the Landmarks Preservation Commission. The property reopened in 1967 as a gay club and retained its original name.
Public officials and celebrities responded positively to the news on social media. Chirlane McCray, Mayor Bill de Blasio's wife, who identified as a lesbian in the '70s and '80s and is a noted LGBT activist, tweeted that it was perfect timing for #Pride2015.
Samantha Power, United States ambassador to the United Nations, tweeted that the Stonewall's newly declared status rightfully marked "its place in our nation's fight for equality, alongside Selma & Seneca Falls. #Pride"
Sara Ramirez, who plays a bisexual doctor on ABC's "Grey's Anatomy," tweeted: "#Stonewall Inn declared an official #NYC historic #Landmark! #LGBT #Pride"
The first Pride Rally occurred one month after the Stonewall riots in 1969 and will mark its 45th anniversary this weekend. The organizers of this year's parade are expecting a huge turnout, particularly as they await a decision from the Supreme Court on marriage equality, according to James Fallarino, Heritage of Pride's media director.