Announcing the change in level from orange to yellow, Secretary of Homeland Security Tom Ridge said airline security would remain tight despite lowering the national threat level.
"We are still concerned about continued threats, but the threat condition we have been following has diminished," he said.
"With the passing of the holidays and many large gatherings…we have made the decision to come down to yellow," Ridge said.
The five-level alert system had been at its second most serious level –orange signifying high- since 21 December. Yellow signifies an elevated level of alert.
Red signifies the highest level of alert.
In stepping up the alert before the year-end holidays, US authorities had warned that al-Qaida could be planning an attack even more dastardly than the September 11 attacks that killed about 3,000 people.
Several flights into the US were cancelled because of heightened security concerns.