Germany will commit up to 1,200 soldiers to support the international coalition fighting the militant group under the plan, which requires parliamentary approval.
It also intends to send Tornado reconnaissance aircraft, tanker planes and a warship in support roles - but will not actively engage in combat.
Chancellor Angela Merkel's governing coalition has a large majority and approval looks assured. The parliament will hold a vote on Wednesday.
France had requested Germany's help in the fight following the 13 November terror attacks in Paris which killed 130 people.
The German cabinet's approval comes a day before British MPs vote on airstrikes against IS targets in Syria.
US, French and Australian warplanes are already taking part in coalition airstrikes in Syria.
Russia has also been bombing IS targets - but there has been concern it has mainly been targeting foreign-backed Syrian rebels.
German foreign minister Frank-Walter Steinmeier acknowledged it could be a protracted fight.
"We are doing what is militarily necessary, what we can do best, and what we can back politically," he told the Bild newspaper ahead of the cabinet vote.
"We need patience against an enemy like IS."
Last week, defence minister Ursula von der Leyen indicated a German frigate would help protect the French flagship Charles de Gaulle aircraft carrier in the Mediterranean from where fighter jets carry out bombing runs.
She said the tanker aircraft could refuel the jets mid-air.
Ms von der Leyen, however, ruled out German forces working with Syrian leader Bashar al Assad.
"The top line is: there will be no cooperation with Assad and no cooperation with troops under his command," she told ARD television.
Germany previously resisted a direct involvement in Syria, but had been providing training and weaponry to Kurdish forces battling IS in the war-torn country.
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