The move follows the reinstatement of Mutasim Gaafar Sir Elkhatim as president of the Sudan Football Association.
He had been forcibly removed from the association offices by police with unelected official Abdel Rahman Elkatim taking over.
FIFA, which frequently suspends African countries over government interference, confirmed the lifting of the worldwide ban on Sudan in a statement on its website.
First to benefit from the removal of the suspension will be the African Nations Championship team, which is scheduled to play a qualifier in Burundi Saturday.
However, the dropping of the ban came too late for CAF club title hopefuls Al Merrikh and Al Hilal Obeid.
Merrikh were poised to reach the Champions League quarter-finals and Hilal Obeid had already secured a Confederation Cup last-eight place.
Group fixtures involving them last weekend were cancelled and the two clubs disqualified along with Al Hilal Omdurman, who were out of contention in the Champions League.
Merrikh and Hilal Omdurman are the most successful and popular football clubs in Sudan and perennial competitors in African competitions.
The Sudanese national team has performed poorly in recent years, however, and is ranked 49th in Africa.