The group called the Fairness Coalition said the approval came with a 4-1 vote.
The ordinance was designed to extend civil rights protections to people who are gay, lesbian, bisexual, and transgender.
The final vote came after several months of debate and the threat of lawsuits.
Sunrise Children’s Services had previously said that it would leave town if the original ordinance passed.
The proposal was later modified with an amendment that would exempt religious-based organizations like Sunrise.
Danville will join a handful of other Kentucky cities with LGBT fairness laws in place, including Covington, Frankfort, Lexington and Morehead.