The authority had suspended the taxi firm's licence after the company 'failed to respond to requests from the local authority's licensing team about their management'.
However, the measure has now been lifted after "productive discussions" with management.
In a statement, the council said: "The suspension of Uber’s operating licence, which was announced by Sheffield Council on Friday, November 29, has been lifted.
"This decision follows productive discussions between Uber and Sheffield Council. Uber provided satisfactory replies to the questions asked by Sheffield Council about the management of Uber."
An Uber spokesperson said: “We look forward to continuing to serve tens of thousands of riders and drivers in Sheffield.”
There appeared to be some confusion as to why the suspension was initially introduced.
While the council said Uber had not replied to their requests for information, the company claimed there had been an administrative error.
Uber said they wanted to change the name on their licence as the named individual would soon be leaving the company but were told by the council they would instead have to apply for a completely new licence.
The firm also claimed the council sent correspondence to the wrong address.
Uber has now submitted an application for a new licence and the authority said a decision will be made on this early next year.
Prior to this, in October 2016 Uber lost a tribunal case on workers rights as the Central London Employment Tribunal ruled that its drivers are not self-employed and should be entitled to basic workers’ rights including holiday pay, a guaranteed minimum wage and an entitlement to breaks.