Fiji's army chief Frank Bainimarama says he has given executive authority back to President Ratu Josefa Iloilo.
Cmdr Bainimarama seized power in December
Cmdr Bainimarama took over as president last month at the same time as he deposed PM Laisenia Qarase in a coup.
The reinstated president will now appoint an interim government, set to be dominated by the military, which will remain in power until elections.
Mr Qarase, however, has not been reinstated, and remains banished on an outlying island.
In a national address on Thursday, Cmdr Bainimarama said he had returned "all executive authority" to Mr Iloilo.
The move does not affect his control over the government, but it still has important significance, correspondents say.
Cmdr Bainimarama did not explain why he made the decision - a reversal from when he first took over the country, appointing himself acting president.
Reports suggest that he has taken the step to appease Fiji's powerful Council of Chiefs, which represent the country's indigenous majority.
FIJI TENSIONS TIMELINE
2000: Brief coup put down by army chief Bainimarama
July 2005: Bainimarama warns he will topple government if it pardons jailed coup plotters
May 2006: PM Laisenia Qarase wins re-election
31 Oct: Qarase tries - and fails - to replace Bainimarama
November: Qarase says he will change law offering clemency to coup plotters - Bainimarama warns of coup
5 Dec: Military declares coup
The council has been critical of the army's actions, and had objected to the treatment of Mr Iloilo, whom Council members first appointed seven years ago.
Soon after he was reinstated, President Iloili made a nationwide address publicly supporting the coup, and saying that, given the circumstances, he would have taken the same actions as Cmdr Bainimarama.
"I fully endorse the actions of the commander and the Republic of Fiji Military Forces in acting in the interest of the nation and in upholding the constitution," he said.
The military had long accused Mr Qarase's administration of being corrupt, and adopting racist policies against the ethnic Indian minority.
President Iloilo will now be expected to swear in an interim government that is being chosen by the military.
Caretaker Prime Minister Jona Senilagakali, who was chosen by the army in the days after the coup, has resigned to enable the formation of this interim administration.