In 2008, the Environment Court noted the severe cultural effects of the water take and required the council to find an alternative water source.
Rotorua Mayor Steve Chadwick said the joint consent demonstrated the community benefit that could be achieved through genuine partnerships with mana whenua.
She said the partnership was "very significant" for a number of reasons.
"Finding an alternative water supply source would have been extremely difficult and Ngāti Rangiwewehi's willingness to work together with us despite the injustices of the past is a huge credit to them.
"Our joint efforts demonstrate that councils don't need ownership of land or total control of all the processes to achieve benefits for the wider community if they work in genuine partnership with iwi."
The council said the partnership had ensured community water supply needs could continue to be met while also meeting the cultural imperative of sustainable use and development according to the tikanga and kawa associated with kaitiakitanga (guardianship).
The parties agreed on a new set of supply management and governance practices and systems.
Chairman of Ngāti Rangiwewehi's Pekehaua Puna Reserve Trust, Louis Bidois, said the joint consent served as "a great step forward for iwi/council relationships for the whole country".
"Things like water sources were previously seen as a commodity but today's council understands and appreciates that it is a taonga, a treasure that needs to be looked after. That's a significant and positive change in approach."
He said being able to work together on a joint resource consent is a credit to both parties involved.
"Our past grievances run deep but a major part of this decision-making process was what's best for our wider community and that was a powerful factor in our decision to proceed."
