The decision takes effect from Friday and will remove the need for people travelling from Sydney to do 14 days of supervised quarantine.
Deputy Chief Health Officer Charles Pain said a briefing from NSW officials had demonstrated that the current COVID-19 cases in Sydney were connected.
“I am also confident in the thorough testing and contact tracing response in NSW, and that this outbreak is contained,” Pain said.
“With this advice and our own review of the evidence, I remain confident about revoking greater Sydney as a hotspot.”
With border restrictions reducing, Pain urged Territorians to remain vigilant with social distancing and other measures to keep coronavirus at bay and said he would like to see more people wearing masks.
He said opening up the region to more travellers posed an increased risk of COVID-19 getting in, but the risk was low and acceptable.
“We could keep the borders up for months and months ahead, but we know what the consequences of lockdowns are,” he said.
“For those arriving from Sydney, welcome to the Territory, but please respect the Territory and take your responsibilities very seriously.”