The United States has removed the People's Mujahedeen of Iran, an Iranian opposition group, from its blacklist of designated terror groups after years of intense lobbying.
Friday’s move came just days ahead of a US appeals court October 1 deadline forcing Secretary of State Hillary Clinton to decide the group's fate.
The State Department said the Mujahedeen-e-Khalq had not committed terrorism for more than a decade and credited its 3,000 members for nearly completing the peaceful departure from their paramilitary base near Iraq's Iranian border.
Effective immediately, any assets the MEK has in the United States are unblocked and Americans are permitted to do business with the organisation.
The MEK, whose leadership is based in Paris, has invested much money and years of intense lobbying to be taken off the list.
The cult-like leftwing group was founded in the 1960s to oppose the shah of Iran, and after the 1979 Islamic revolution that ousted him it took up arms against Iran's clerical rulers.
MEK leader Maryam Rajavi said in a statement from Paris that she "welcomed and appreciated" the decision to delist the movement.
"This has been the correct decision, albeit long overdue, in order to remove a major obstacle in the path of the Iranian people's efforts for democracy," she said in the statement.
The MEK says it has now laid down its arms and is working to overthrow the Islamic regime in Tehran through peaceful means.
But in its note about delisting the MEK, the State Department stressed that it had not forgotten the group's militant past.
"With today's actions, the Department does not overlook or forget the MEK's past acts of terrorism, including its involvement in the killing of US citizens in Iran in the 1970s and an attack on US soil in 1992," it said.
"The department also has serious concerns about the MEK as an organisation, particularly with regard to allegations of abuse committed against its own members."
Washington designated the MEK a "foreign terrorist organisation" in 1997, putting it in a category that includes al-Qaeda, the Palestinian Hamas and Lebanon's Hezbollah.
The MEK has no support in Iran, and no connection to domestic opposition groups.
Britain struck the MEK off its terror list in June 2008, followed by the European Union in 2009.
In June, the US Court of Appeals in Washington said that if Clinton did not decide whether to deny or grant the group's request to be delisted within four months, it would issue a special writ and remove the group itself.