Fevola was alleged to have exposed himself to a woman at a non-club function in early September, and was indefinitely suspended by the Lions upon confirmation of a police investigation.
Club powerbrokers met following Wednesday's news that police would not take the matter further with the meeting resulting in Fevola's reinstatement.
The 29-year-old is free to resume training and rehabilitation commitments at the club, including the Lions' trip to China to play Melbourne in an exhibition game on October 17.
However, he won't be entirely in the clear until the AFL completes its own investigation into the matter.
The League issued a statement late on Wednesday.
"The AFL wishes to advise it will speak to Queensland Police regarding a decision today to end an investigation into a formal complaint regarding the behaviour of Brisbane Lions player Brendan Fevola at a non-club community function last month," the statement read.
"The AFL will liaise with police before making any further decision on any next steps in this matter, and will update media after that has occurred."
Lions chairman Angus Johnson said his club would await the League's findings before finalising the matter.
"My understanding is that Queensland Police asked the AFL to put their investigation on hold until they completed theirs," Johnson told afl.com.au's Trade Week Radio.
"I would imagine the AFL will now conclude their investigation and they'll be advising us what their findings are."
Fevola, who was traded to the Lions from Carlton at this time last year, is recovering from groin surgery that will see him sidelined until at least December.
He kicked 48 goals from 17 games in his first season at the club.
Fevola said through his management that he was pleased with the outcome of the police investigation.
"I was always confident justice would prevail because I knew, as I said from the outset, that I had done nothing wrong," he said.
"I look forward now to putting this matter behind me, flying to China with the Lions boys next week, and completing my injury rehabilitation before focusing on an important pre-season."
