Kuwaiti athletes will be allowed to compete under their country's flag at the London Games.
The International Olympic Committee suspended Kuwait in 2010 because of political interference. The IOC said in May Kuwaiti athletes may participate at the games despite the dispute, but would have to compete and march in the opening ceremony under the Olympic flag.
IOC spokesman Mark Adams said Sunday the suspension has been lifted, adding the Kuwaiti flag will be raised and the national anthem played at the Olympics.
The Kuwait News Agency praised the decision, which was announced a day after Kuwaiti officials met with IOC President Jacques Rogge. The state-run news agency did not give details of the meeting.
Kuwait is sending 11 athletes to the Olympics that start July 27. They will compete in shooting, table tennis, swimming and track and field.