The state of emergency was allowed to expire, ending 10 months of heightened restrictions and greater police powers.
Siraj Fegessa, the defence minister, told an emergency meeting of parliament that, "even though there are a few situations that are happening in some areas, we have understood that it can be handled by the local security and administration."
"We have assessed the general situation and we have provided a report to the parliament and our decision to lift the state of emergency," he said.
Ethiopia imposed the state of emergency in October 2016 after protests among some of the country's largest ethnic groups, unhappy over what they saw as the government's heavy-handed rule.
Though ostensibly a democracy, the ruling Ethiopian People's Revolutionary Democratic Front and its allies hold every seat in parliament and wield unchecked power in the country.
The spark for the protests was a 2015 government proposal to expand the limits of the rapidly-growing capital Addis Ababa into the surrounding Oromia region, home to the country's largest ethnic group the Oromos, who feared the expansion could rob them of their land.
The northern Amhara people subsequently joined the protests.
Since November 2015, demonstrations, sometimes violently suppressed, have led to 940 deaths and 21,000 arrests, according to government figures.
The emergency decree contained provisions banning gatherings and allowing police to hold people without trial.
The unrest stopped shortly after the proclamation, which in March was extended beyond its initial six months.
Peace in the countryside allowed Ethiopia's government to refocus international attention on economic growth and plans to develop the country, one of Africa's poorest.
But Oromia region residents who spoke to AFP complained that their grievances were never addressed and the only reasons they stopped protesting was because they feared being jailed.
In July, shops in Addis Ababa and Oromia closed their doors in protest at a tax hike on small businesses, the first organised demonstration since the emergency declaration.
