The move, ordered by Jacques Chirac, the French president, and approved on Tuesday by the cabinet, lifts the emergency measures more than six weeks before they were originally set to expire. The measures were first enacted on 8 November.
"Considering the situation of these past several weeks, I decided to end it," Chirac said on Tuesday in New Year's greetings to the cabinet.
He said the emergency measures had been precautionary and "strictly temporary".
He praised public authorities for being "fully mobilised to make sure the law is respected and favor the return to calm".
During the unrest that broke out in late October, youths set fire to some 9000 vehicles around the country. The trouble was concentrated in poor suburbs where many immigrants from North and West Africa live with their French-born children.
The state of emergency allowed the use of curfews, night-and-day police searches inside homes and other exceptional measures.
However, only a few towns and regions imposed curfews for minors; Paris did not.
Opposition Socialist and Green party lawmakers had criticised what they viewed as disproportionately strong measures for the rioting, which culminated in the burning of 1400 cars overnight on November 5-6.