To comply with the new directive, the fund looks set to divest assets in mining giants working with coal, such as Glencore, BHP Billiton and Anglo American, and energy companies such as Germany's RWE and Italy's Enel.
The proposal was originally put forward by the country's right-wing government in April, and aimed at tightening the criteria for managing the fund.
Previously, the fund was told to only keep clear of mining companies or energy producers whose coal-related activities represented 30 percent or more of their business.
But that allowed large coal players to slip through the cracks since most of their revenue came from other activities.
Going forward companies will be judged on production levels and the fund won't be able to invest in companies producing more than 20 million tonnes of coal per year or more than 10,000 MW of electricity from coal.
According to several environmental groups, the fund will need to offload holdings in eight companies, worth an estimated 5.2 billion euro ($5.8 billion).
"It is great to see Norway divesting some of the biggest enemies of the Paris Climate Agreement," Heffa Schuecking, director of environmental NGO Urgewald, said.
Regrettably, she added, the measure would not apply to companies planning to build new coal power plants.
Parliament also endorsed the government's proposal to ban certain oil companies engaged exclusively in hydrocarbon exploration and production.
The new rules also give the fund more leeway to invest in companies with renewable energy projects, such as wind or solar farms, before they are listed on a stock exchange.
Changes to the priorities of the wealth fund are not entirely motivated by environmental concerns.
As the largest oil producer in Western Europe, Norway is seeking to limit the exposure of its public finances to a sector that is being challenged, including by investors, because of climate concerns.
"The big story in energy economics over the next decade will be the storming of the bastions of fossil fuels by renewable energy sources that are cheaper to build and run, orders of magnitude cleaner, and also much easier and quicker to deploy," said Mark Lewis, head of sustainability research at BNP Paribas.