The college sports governing body said Wednesday that Newton is eligible to play for the second-ranked Tigers in the Southeastern Conference championship game against South Carolina on Saturday.
The NCAA had concluded on Monday that a violation of Newton's amateur status had occurred. A day later, Auburn declared Newton ineligible and requested his eligibility be reinstated.
The Heisman front-runner now has been cleared to compete without conditions with his team a win away from playing for a BCS title.
"Based on the information available to the reinstatement staff at this time, we do not have sufficient evidence that Cam Newton or anyone from Auburn was aware of this activity, which led to his reinstatement," Kevin Lennon, NCAA vice president for academic and membership affairs, said in a news release.
"From a student-athlete reinstatement perspective, Auburn University met its obligation under NCAA bylaw 14.11.1. Under this threshold, the student-athlete has not participated while ineligible."
The NCAA won't say its case is closed on Newton. However, its statement notes that reinstatement likely occurs "prior to the close of an investigation."
It's at least a temporary alleviation of fears that Auburn's 12 wins so far and any titles won would wind up being vacated if the NCAA found that Newton had been ineligible because of violations committed before signing with the Tigers last New Year's Eve.
The NCAA became involved over the summer in the pay-for-play scheme that was discussed during Newton's recruitment. Two Mississippi State boosters have accused Cecil Newton and former Mississippi State player Kenny Rogers of trying to get up to $180,000 for Cam Newton to play for the Bulldogs while he was being recruited out of junior college last year.
The NCAA said Wednesday that Auburn and NCAA enforcement staff agreed that Newton's father and an owner of a scouting service worked together on the scam. The NCAA did not name Rogers.
Auburn has agreed to limit Cecil Newton's access to its athletic program and Mississippi State has dissociated itself from Kenny Rogers, who worked for a sports agent.
"The conduct of Cam Newton's father and the involved individual is unacceptable and has no place in the SEC or in intercollegiate athletics," said Mike Slive, Southeastern Conference Commissioner. "The actions taken by Auburn University and Mississippi State University make it clear this behavior will not be tolerated in the SEC."
It wasn't immediately clear what access Cecil Newton would have at Auburn and school officials said they would have no immediate further comment.
Kenny Rogers' attorney, Doug Zeit, told The Associated Press that he had received a letter from Mississippi State on Wednesday morning stating that Rogers has been disassociated from the school.
"We're not that surprised," Zeit told the AP. "From what I understand, anything that's related to athletics at Mississippi State, (Rogers) can't participate."
Zeit took issue with the wording of Mississippi State's letter. The attorney said the school's reasoning in the letter for dissociating itself with his client was because Rogers told the NCAA he made a solicitation for a player.
"Kenny Rogers never made a solicitation," Zeit said. "We never told the NCAA that. I want to make that perfectly clear. Cecil Newton asked for the money and then Kenny Rogers passed along Newton's message. That's what happened. Cecil Newton asked for the money. Kenny Rogers was the messenger."
Newton, who started his career at Florida, chose Auburn over Mississippi State after one season in junior college. He has been spectacular this year, leading Auburn to a 12-0 season.
But the allegations and media scrutiny have shadowed Newton and the Tigers for the past month, and the star quarterback hasn't spoken to reporters since Nov. 9.
Newton is the SEC's leading rusher, one of the nation's most efficient passers, and the league's first player to have 2,000 yards passing and 1,000 yards rushing in a season.
He accounted for all four of Auburn's touchdowns in last week's 28-27 win at Alabama, rallying from a 24-point deficit to keep the Tigers in contention for the national title.