The change, which was prompted by concerns over the country's ageing population and shrinking workforce, was announced in October by the ruling Communist Party and takes effect from the first day of 2016.
The policy was instituted in the late 1970s, and restricted couples to only a single offspring through a system of fines and even forced abortions.
For years the authorities argued it was a key contributor to China's economic boom and had prevented 400 million births.
Families in rural areas were allowed to have children if the first was a girl, while ethnic minorities were allowed an extra child, leading some to call it a "one-and-a-half child" policy.
But it also led to heart-breaking losses for would-be parents, and prompted sex-selective abortions or infanticide targeting girls because of a long-held social preference for boys.
China's population is now ageing rapidly and there is a severe gender imbalance - all while the nation's workforce grows ever smaller.
The new law means married couples are now allowed to have a second child, but the limit on additional births remains.
Officials from the National Health and Family Planning Commission said back in November that around three million extra babies will be born each year over the next five years as a result.
This would add a total of around 30 million people to China's labour force by 2050, the officials added.
Despite the change, many experts say it is too little, too late to address China's coming population crisis.
Others have warned that many couples do not want more children, particularly given the costs, and the effects of the change remain unclear.
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