The council said falling pupil numbers across the local authority had made the decision unavoidable.
Dewi Jones, cabinet member for education, said Cyngor Gwynedd had about 9,000 children in its primary schools in 2016, but that had dropped to just over 7,800.
Jones told the meeting at which the closure was confirmed that it was one of the most difficult decisions he had faced.
“Nobody goes into education in order to close schools,” he said.
“Our ambition is to see schools thriving, children succeeding and communities staying strong.”
But he said the council had a responsibility to consider the current situation facing the school.
“The demographic challenges facing some of our rural communities are real,” he said.
“However painful it is to acknowledge that, we cannot ignore the facts before us, and in the specific position of Ysgol Y Garreg, it is impossible to ignore the seriousness of the situation.
“That’s a substantial reduction, and in light of that, we can’t just continue as we are. It forces us to have to change things.”
Ysgol Cefn Coch, roughly 2 miles (3.2km) away from Llanfrothen, will now become the designated alternative school for the catchment area from 1 September.
Ysgol Y Garreg is one of a number of schools in Gwynedd due to close this year.
Two small schools in Dyffryn Nantlle will shut at the end of December, and an independent school, St Gerard’s in Bangor, will close next month.
According to the latest Welsh government data, external, 31 council-run schools across Wales have closed since January 2020.