At midnight local time (12:00 GMT), all of New Zealand moved to level one, the lowest of a four-tier alert system.
Under new rules, social distancing is not required and there are no limits on public gatherings, but borders remain closed to foreigners.
New Zealand has reported no new Covid-19 cases for more than two weeks.
Prime Minister Jacinda Ardern told reporters she did “a little dance” when she was told the country no longer had any active virus cases.
“While we’re in a safer, stronger position, there’s still no easy path back to pre-Covid life, but the determination and focus we have had on our health response will now be vested in our economic rebuild,” Ms Ardern said.
“While the job is not done, there is no denying this is a milestone. So can I finish with a very simple, ‘Thank you, New Zealand’.”
New Zealand first went into lockdown on 25 March, setting up a new four-stage alert system and going in at level four, where most businesses were shut, schools closed and people told to stay at home.
After more than five weeks, it moved to level three in April, allowing takeaway food shops and some non-essential businesses to re-open.
As the number of community cases continued to decline, the country moved into level two in mid-May.
The move to level one comes ahead of time – the government had originally planned to make the move on 22 June, but it was brought forward after no new cases were reported for 17 days.
Under the new rules, all schools and workplaces can open. Weddings, funerals and public transport can resume without any restrictions. Social distancing is no longer required but will be encouraged.
The country’s borders remain closed to foreign travellers, and rules remain in place requiring New Zealanders arriving from abroad to go through a 14-day period of isolation or quarantine.
Ms Ardern warned that the country would “certainly see cases again”, adding that “elimination is not a point in time, it is a sustained effort”.
New Zealand has recorded 1,154 confirmed cases and 22 deaths from Covid-19 since the virus arrived in late February, but has been widely praised for its handling of the crisis.
For many, the latest announcement is a cause for celebration – but not without caution. Auckland-based lorry driver Patrick Weston told the BBC: “Everyone is so happy we’re finally through this, but we’re still nervous.
“I think the main thing people are worried about is the economy – so many people out of work, so many people looking for work at the same time.
“[On Tuesday] all restrictions are lifted and we can carry on as normal. Sporting events, music events can all take place with no restriction of numbers. We’re still being encouraged to social distance of course, so we hope people will be sensible.
“We’re happy, but nervous about the future.” (Courtesy BBC)