Berenson and her attorney told The Associated Press on Monday that the ruling is final and cannot be appealed by prosecutors, ending eight months of legal back-and-forth over her fate.
"I'm pleased with the decision and grateful for it," Berenson said by telephone, adding that she was "greatly relieved."
"The only thing that she can do now, with tranquility, is to plan her life," said Anibal Apari, her attorney and the father of Berenson's 20-month-old son, Salvador.
Under terms of her parole, Berenson cannot leave Peru until the sentence ends in 2015 - unless President Alan Garcia decides to commute it. He has said previously that he would not consider doing so until the legal case ran its course.
Constitutional law expert Mario Amoretti agreed that the ruling should be final. He said it's conceivable that the state could file a legal challenge claiming a violation of the constitution, but he doesn't believe there are grounds for such an appeal.
Berenson was first freed last May, only to be sent back to prison for three months on a technicality. The judge who originally granted parole reinstated that decision and released the New Yorker again, but prosecutors continued to appeal.
The three-judge appeals court's decision - dated Jan. 18 but made public Monday - rejected prosecutor Julio Galindo's argument that, as someone convicted of aiding terrorists, the 41-year-old New Yorker should not have been able to use work and study to shave time off her 20-year sentence.
The judges also cited a psychological report that said Berenson had "developed projects for a future life, grounded in motherhood" and had, in essence, been rehabilitated.
Reached by the AP on Monday, Galindo said he had not read the decision and would not comment.
Asked what she plans to do now, Berenson said: "I'm just going to go on with my life, basically." She and Apari are separated, though the two remain close friends.
Berenson has said she wants only to return to her native New York, where her parents are university professors, and devote herself to Salvador.
"I want to redo my life, live as a normal person," she told the AP in a November interview in her rented apartment in Lima's upscale Miraflores district. She said she hopes to earn a living as a translator.
Reached at his home in New York, her father, Mark Berenson said Monday that he and his wife, Rhoda, were "thrilled."
Berenson said the news of his daughter's parole appeared in Peruvian newspaper La Republica on Saturday but could not be verified until today because the courts were closed.
"It was a tremendous relief," he said.
Had Berenson been forced back behind bars, Peruvian prison rules stipulate that Salvador could not have stayed with her after reaching age 3. Mark Berenson said he and his wife might have had to move to Peru to care for the boy.
"None of that is necessary now, and fortunately we can go on with our lives," he said.
Since her parole in May, Lori Berenson has repeatedly expressed regret for aiding the rebel Tupac Amaru Revolutionary Movement.
Arrested in 1995, she was accused of helping the rebels plan an armed takeover of Congress, an attack that never happened.
A military court convicted her the following year and sentenced her to life in prison for sedition. But after intense U.S. government pressure, she was retried in civil courts in 2001 and sentenced to 20 years for terrorist collaboration.
Berenson was completely unrepentant at the time of her arrest but softened during years of sometimes harsh prison conditions, eventually being praised as a model prisoner.
Yet she is viewed by many as a symbol of the 1980-2000 rebel conflict that claimed some 70,000 lives. The fanatical Maoist Shining Path movement did most of the killing, while Tupac Amaru was a lesser player.
Berenson has acknowledged helping the rebels rent a safe house, where authorities seized a cache of weapons. But she insists she didn't know guns were being stored there. She denies ever belonging to Tupac Amaru or engaging in violent acts.
In the November interview, Berenson said she was deeply troubled at having become Peru's "face of terrorism."
Its most famous prisoner, she also became a politically convenient scapegoat, she said.