Without the piece, the exhibition faced cancellation
The altarpiece started to arrive in New York in crates on Friday, with the remainder set to be shipped on Monday.
But after intervention from Brazilian president Fernando Henrique Cardoso, the federal judge revoked the ban.
'Agreement'
Judge Ubaldo Cavalcante said: "Not exhibiting the altar could tarnish Brazil's name.
"It wouldn't look good, because we had made an agreement."
The exhibition, which opens on 19 October, is called Brazil: Body and Soul, and will show 350 pieces of Brazilian baroque and contemporary art.
Julian Zugazagoitia, the show's organiser, said: "After the events of September 11, they were right to be concerned about the altar.
"It is one of the jewels of Brazilian baroque - a unique piece."
The initial ban by a federal court in the northeastern port city of Recife led to representations by Brazilian diplomats and cabinet ministers, as well as the president.
Brazil's Consul-General in New York, Flavio Perri, also wrote a letter to the Brazilian culture minister.
"The exhibit will be a show of confidence in the people and authorities of this country," said the letter.
"It will be a show of solidarity with New York."
Termites
The gold-encrusted altarpiece is 48 feet high and 26 feet wide, and until recently sat in the 16th-century St Bento monastery in Olinda, a colonial city just outside Recife.
But the 215-year-old wooden altar was found to be riddled with termites, and urgently needed restoration.
The rotted wood was replaced and reinforced, the original art work and gold leaf cleaned - and where necessary replaced with 23-carat Italian gold.
Reverend Bernardo Alves, the prior of the St Bento monastery, said: "It was in deplorable condition.
"Now the entire community is happy, for Brazil and for the world."
The exhibition will travel on to the Guggenheim in Bilbao, Spain.