The 25-year-old goalkeeper is now free to form part of Alex McLeish's first-team squad at the City Ground.
Forest had been looking to bolster their keeping ranks after informing Lee Camp that he is free to move on.
Al-Rashidi has been in their thoughts for some time, having undergone a month-long trial at the City Ground last summer.
Forest were impressed by what Al-Rashidi had to offer and have had him watched in club action for Al Arabi by goalkeeping coach Paul Barron.
Barron attended the work permit tribunal at Wembley on Wednesday, along with McLeish, head of recruitment and scouting Keith Burt and chief executive Mark Arthur.
Forest are delighted with the Football Association's decision to clear Al-Rashidi's path, with the shot-stopper set to make history by linking up with the Reds.
Chairman Fawaz Al Hasawi told the club's official website: "I would like to thank the FA tribunal for reaching a positive outcome for the club and for Khalid.
"He is excited about the prospect of becoming the first Kuwaiti to play in English football and helping to spread the name of Nottingham Forest in Kuwait."