The US is lifting most of the economic and trade sanctions it first imposed on Sudan two decades ago.
However Sudan will remain listed as a state sponsor of terror.
US officials said Sudan had made progress in counter-terrorism and human rights issues. The process of lifting the sanctions began under the Obama administration earlier this year.
Sudan's President Omar al-Bashir remains wanted by the International Criminal Court for alleged war crimes.
Human rights groups have opposed the easing of sanctions.
Heather Nauert, spokesperson for the US State Department, said in a statement that the decision followed "a focused, 16-month diplomatic effort to make progress with Sudan".
She said the move recognised Sudan's "sustained positive actions" but more progress was needed.
Sanctions were first imposed on Khartoum in 1997, when it harboured fugitives including Osama bin Laden.
A further round was put in place in 2006 in response to Sudanese forces' actions in the Darfur conflict.
Citizens of Sudan were removed from the US travel ban restrictions last month.
US still sustains its travel ban to neighboring Chad, a move which has left many observer curious.
Andrew Prasow, from Human Rights Watch, told Reuters that lifting the sanctions "sent the wrong message" when Sudan had "made so little progress on human rights".
Maddy Crowther, from British-based campaign group Waging Peace, said the US government was "wrong-headed" to focus on Sudan's offensive military activity, and not civilians' safety, in making the decision.
Trump administration has since inception sought to reverse every move made by Obama administration however not in this case. The move is to continue despite Human Right concerns by civil society organisation within and outside the US.
However, hope of a better economic situation xcites the Sudan Locals and Leaders as a result of the lift on the bans
This move has been eagerly anticipated in Khartoum since President Obama partially eased the punitive measures before he left office.
It is expected to boost sectors in the Sudanese economy that have suffered from the trade embargo - these include aviation, agriculture, oil and technology.
The move will be celebrated by some as a victory for the ruling National Congress Party, but it remains to be seen how the average Sudanese will benefit.
For decades, Khartoum has blamed the sanctions for all sorts of ills that befell the Sudanese economy, rather than confronting the chronic mismanagement and the rampant corruption.
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