Union leaders and government officials brokered a deal after round-the-clock talks.
Following an all-night meeting, strike leader Adams Oshiomhole of the umbrella Nigeria Labour Congress (NLC) told reporters that the 29 trade unions affiliated within his congress had agreed to go back to work.
The decision came as a compromise on petrol prices was made. The issue has caused a great deal of suffering and loss of life since 30 June.
Oshiomhole said: "Having compelled the federal government to back down and reduce the [fuel] price from 40 naira to 34 naira per litre, the nationwide strike action and mass protest is suspended”.
The NLC had demanded prices not exceed 32 naira on Sunday, but agreed to the 15 percent reduction compromise. A naira is worth less than a US cent.
Labour's decision may help reassure oil markets sensitive to supply complications.
Further industrial action could have disrupted exports from the world's fifth largest exporter of crude oil and forced up prices.
Cause of strike
Nigerian President Olusegun
Obasanjo to meet Bush on Friday
The NLC launched the strike on Monday last week after Obasanjo abolished subsidies on fuel, causing prices to go up by more than 50 percent.
The pump price of petrol had shot up from 26 naira to 40, sparking public anger.
Earlier, the protests led to loss of life. Ten protesters were shot dead by Nigerian police as rioting spread across the country on Monday alone.
The bodies of three shot protesters were shown on Nigerian television on Monday which erupted into a day of protest across the country, but union chiefs said the number of dead was at least 10.
Nigeria's preparations to play host to US President George Bush may have played a role in ending the sanctions.
The US imports oil from Nigeria and Bush is due to make an overnight stopover in Abuja on Friday and meet President Olusegun Obasanjo.
However, Nigeria’s own refineries cannot meet domestic demand, so the OPEC member has to import to meet the shortfall.
Obasanjo, whose re-election in April sparked opposition accusations of vote-rigging, now faces mounting pressure from economic disruption and the prospect of wider political protests.