The plan covers 40 properties on upper Main Street and several near the town dock.
The vote came despite the objections of many speakers, who voiced concerns about traffic and a change in the character of Main Street.
Councilwoman Dina De Giorgio, who represents Port Washington, announced at the beginning of the meeting that she planned to abstain from voting, citing public speculation in recent weeks about her personal interest in property covered by the rezoning proposal.
"The controversy that's swirling around should be about the merits of this proposal, not about me," she said. "I decided to take myself out of the equation in the hope that the discussion will be refocused on the merits."
The vote was 6-0, with De Giorgio abstaining.
The plan allows for mixed-use commercial and residential buildings within the business overlay district, and creates design guidelines for the area intended to beautify the commercial corridor.
Proponents, such as Dan Donatelli, co-president of Residents for a More Beautiful Port Washington, which helped to create the proposal, said the corridor would be revitalized under the plan.
"Do we attempt to steer the forces of change in a positive fashion to preserve what we love, or do we allow change to happen through our inaction and allow our buildings to get a little older and a little dingier every year?" he asked.
Mitch Schwartz, representing the Port Washington Chamber of Commerce, said the changes "will allow owners to plan and invest in their properties."
But a number of people spoke against the idea, arguing that beautification could occur without rezoning. Others in the audience waved signs that read "Beautify Don't Destroy Main Street."
"I agree there's garbage on Main Street. I agree there's an issue with Dumpsters. I agree that Main Street could be beautified. But we don't need to rezone to do that," Steven Rosenbaum of Port Washington said. "Why are we rezoning Main Street when this can be done without having to rezone?"
Opponents also said new apartments would create problems for traffic and increase the burden on the school district, and worried that the design guidelines and rezoning would encourage "cookie-cutter" buildings that would detract from the charm of Main Street.
"I have been here long enough to know that the impact people perceive is not necessarily what will be," Supervisor Jon Kaiman said as a group of opponents walked out of the room in protest. "My belief is it will make a positive impact."