Iran's supreme court has overturned a 1999 ban on a reformist newspaper.
Neshat publisher Latif Safari plans to get the paper back on its feet
The Neshat newspaper was banned after criticising Iran's penal system, which has its roots in Islamic Sharia law.
Many of its staff were arrested in a crackdown on the liberal press, including publisher Latif Safari who was jailed for two-and-a-half years.
Neshat's editor, Mashallah Shamolvaezin, who was also jailed, told the BBC the verdict was testament to the fairness of Iran's supreme court.
Analysts say the move may be intended to display a greater tolerance of dissent before presidential elections in June.
Mr Safari said he hoped Neshat would resume publication soon and invited its former employees to return to their jobs, according to Iranian student news agency Isna.
The media freedom group, Reporters Without Borders, says Iran's record for jailing journalists is among the worst in the world.
Separately, an appeals court in Iran has said dissident academic Hashem Aghajari is free to resume teaching, having spent the last few months on bail.
A court had sentenced Mr Aghajari to death in 2002 after he claimed Muslims were not "monkeys" who should blindly follow their religious leaders.
Massive student protests followed the ruling and last year an appeal court revoked the death sentence in favour of a jail term, before freeing Mr Aghajari on bail.