The decision came after some Portland Timbers and Seattle Sounders fans protested being barred from games with walkouts and silent demonstrations, The Washington Post reported.
MLS cited their ban on political statements at games, maintaining the flag falls under that category because it's used by Antifa.
A fan waving a Trump flag was also removed from a game early in the season.
“As part of this decision to update the Fan Code of Conduct for 2020, MLS has suspended the prohibition on the Iron Front imagery at matches for the balance of the 2019 season and Audi MLS Cup Playoffs while the working group conducts its analysis," MLS' statement says in part.
The symbol was once used by the German paramilitary organization Iron Front that opposed the Nazis before World War II.