The 19-year-old South African was sidelined for 11 months after undergoing gender tests following her 800-meter victory at the world championships last August.
The International Association of Athletics Federations said Tuesday it accepts the conclusion of a panel of medical experts that she can compete with "immediate effect."
The statement adds that medical details of her case remain confidential and the IAAF will have no further comment on the matter.
"She told me she doesn't have any problems, and she is happy," Semenya's father Jacob Semenyaearlier Tuesday.
The announcement brings to an end an 11-month saga involving the teenage athlete, who burst onto the world scene in Berlin where she dominated the 800 final as an 18-year-old to win gold in her first major event.
However, her dramatic improvement in times and muscular build led the IAAF to order the gender verification tests.
Semenya was welcomed as a national hero in South Africa following her stunning victory but reports of the gender tests and stories in the Australian media saying Semenya had both male and female sex organs caused outrage in her home country and led some public officials to rally behind her.
Last month, South Africa's sports ministry abruptly canceled a news conference where it was expected to announce Semenya's return to athletics.
Semenya's lawyers said they had been told the briefing, which was to be hosted by South Africa's Minister of Sport Makhenkesi Stofile, had been called off because the executive committee of the IAAF had not received a "formal briefing" on Semenya's case by medical officials.
Semenya could return to competition at the world junior championships in Moncton, Canada, starting on July 19. However, her coach Michael Seme has said she was not race fit.