The last-minute decision ended more than two months of brinksmanship with the Canadian company that makes the smart phones, a tool popular both with businesspeople and gadget-loving consumers in this Gulf federation.
The ban on e-mail, messaging and Web services - which the government threatened to impose over security concerns - was due to take effect Monday.
Half a million local users and thousands of BlackBerry-toting business travelers would have been affected. Dubai's airport, the region's busiest, handles about 100,000 passengers daily.
"It's going to come as quite a relief," said BlackBerry user Matthew Reed, a Dubai-based analyst at Informa Telecoms & Media, a research firm. "It was not at all clear what would happen until right up to the end."
While a number of countries, including India and Saudi Arabia, have threatened BlackBerry crackdowns in recent months, the UAE's proposed ban drew widespread attention because of the country's tough negotiating stance and its role as a highly wired, tech-savvy trade and transportation hub.
The Emirates telecommunications regulator confirmed that a deal had been reached with device maker Research in Motion Ltd. that brought the devices into compliance with local laws.
The Telecommunications Regulatory Authority provided few details, but said "no suspension of service will occur" Monday as previously planned, according to a statement carried by state news agency WAM.
The wording of the announcement suggested the reprieve was permanent.
The TRA acknowledged "the positive engagement and collaboration of Research In Motion (RIM) in reaching this regulatory compliant outcome." It wasn't clear what concessions, if any, the Canadian device maker made to avert the ban.
TRA representatives were not available for comment Friday, the start of the local weekend.
List of Countries Considering BlackBerry Ban
RIM declined to comment specifically on the UAE decision.
"RIM cannot discuss the details of confidential regulatory matters that occur in specific countries, but RIM confirms that it continues to approach lawful access matters internationally within the framework of core principles" it has spelled out in the past, the company said in an e-mailed statement.
Shardul Shrimani, a telecoms analyst at IHS Global Insight, said RIM likely gave authorities some limited access to the encryption data they use to safeguard users' messages or will allow them access to its servers.
"They must have come to some sort of agreement where there's some limited access," Shrimani said.
RIM's co-CEO Jim Balsillie said last month that the company has no way of providing government officials with the text of encrypted corporate e-mails sent on its phones, but that it won't object if individual companies that use the devices hand over their encryption keys to authorities.
Balsillie said countries that want access to BlackBerry e-mails could theoretically set up a national registry where companies doing business within their borders would have to provide government officials with the ability to peek at encrypted messages.
The consumer version of BlackBerrys carries a lower level of encryption than the ones made for corporate clients. Emirati authorities would likely want the ability to access those phones' data as well.
Saudi Arabia in August backed down from a threat to block the popular BlackBerry Messenger service after closed-door talks with RIM, resolving for now a dispute over the phones there.
India has also put off plans to block corporate e-mail and messaging services unless RIM makes data more easily available to its intelligence and law enforcement agencies. New Delhi gave the company a 60-day reprieve starting Aug. 31.
Other countries, including Lebanon and Indonesia, have raised BlackBerry concerns but have not announced plans to block service.
UAE BlackBerry users were thrilled that a ban had been averted there Friday.
"We are very happy. It's a good decision," said BlackBerry user Jitendra Gianchandani, an accountant who runs a consulting company in the Emirates.
Gianchandani said he had no problem with the government potentially gaining access to BlackBerry data so long as it is trying to protect against unauthorized use and terrorist threats.
Announcement Likely to Raise Questions
But Reed, the telecoms analyst, expects many BlackBerry owners will want more clarity on the terms of the deal.
"RIM's big corporate clients might be wondering what kind of compromises it might have made," he said.
The UAE city-state of Dubai hosts the regional headquarters of numerous multinational companies, many of whom ship goods through its hulking seaport, the busiest in the Middle East. The Emirati capital of Abu Dhabi is one of the world's largest oil producers and an increasingly important source of investment capital.
BlackBerrys are popular because data sent through them is seen as highly secure.
Emirati authorities have raised concerns that the phones' security features could be misused by terrorists and criminals. The U.S. government and some analysts say those concerns are legitimate.
Free-speech advocates have criticized the crackdown, saying it provides a convenient justification to tighten controls on the flow of information. UAE censors already patrol the Internet, blocking access to pornography and other sites deemed dangerous or offensive.
Shrimani said he was not surprised the Emirates relented in the end.
A service ban "could have had a negative impact on their economy," he said. "So it really was in their best interest to stand back on this occasion."