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Hospitals had stopped performing elective surgeries in March to make beds available for an expected surge in coronavirus patients.
The modified order allows for surgeries dealing with cancers, heart valves and chronic diseases. Cosmetic procedures are still prohibited. The ban could be put back in place should a surge occur.
"We are in a position today to begin to pull back and lean in by beginning to schedule surgeries once again, throughout not only our hospital system but our broader health care delivery system," Newsom said. "These are surgeries that, yes, are scheduled but also essential -- tumors, heart valves -- the need for people to get the kind of care that they deserve. If it's delayed it becomes ultimately denied. If it's delayed it becomes acute and that fundamentally is a health issue."
He said state officials will monitor hospitals to make sure they aren't overwhelmed.
Newsom, however, said the state wasn't ready to reopen its economy, saying it depends on how widely available testing will become. Social distancing and all other stay-at-home provisions remain in place.
“We are not prepared to do that today,” Newsom said of allowing most businesses to reopen. “When we’re ready, we’ll make those announcements.”
To date, California has tested around 465,000 of its 40 million residents. A shortage of kits has hampered efforts to expand testing.
Newsom said several factors will determine whether to lift lockdown orders. Those factors include the ability to expand testing, preventing infections and ensuring that businesses and schools reopen safely.
California has nearly 36,000 confirmed coronavirus cases and 1,350 deaths, according to Johns Hopkins University. Newsom's decision comes as several states are beginning to roll back similar orders.
The Associated Press contributed to this report.