The Food Standards Agency (FSA) said the controls were not "proportionate" to the "very low risk" and removing them would not compromise the consumer.
The disaster in 1986 affected 10,000 UK farms, including 334 in north Wales.
The movement of sheep was heavily restricted after the nuclear disaster.
Before farmers could sell livestock, the animals' radiation levels had to be monitored. If they were above a certain level, the sheep were moved to another area and the levels had to subside before they could be sold and consumed.
The lifting of the restrictions comes after a 12-week consultation with key stakeholders including consumers, affected farmers, farming unions and trade bodies.
The FSA board agreed to lift the controls from 1 June, 2012.
Ed Bailey, National Farmers' Union Cymru president, said: "It cannot be anything else apart from good news. We've had the assurances that the product is completely safe for human consumption and that's the main thing."
Farmer Peter Jones, from Capel Curig, in Conwy, has around 1,000 sheep. Last year, 60 of his sheep exceeded radiation levels and had to be moved to lower ground. In 2010, just 11 of his flock were affected.
Mr Jones welcomed the news the restrictions had been lifted.
He said: "I'm glad I won't have to scan (his flock). If the FSA says it's safe then it must be."
Farmer Glyn Roberts, deputy vice president of the Farmers' Union Wales, runs a beef and sheep farm in Betws-y-Coed in Conwy county.
He said: "In the beginning it did have a financial impact on us because we couldn't sell our sheep. But then, after a few months, we could sell them but supply outweighed demand.
"Now, after all this time, lifting the restrictions just means the final level of bureaucracy has been lifted.
"We can sell our stock, we just had to monitor their radiation levels."
Out of the 9,800 UK holdings, and more than 4m sheep originally placed under restriction, there are only 327 farms in north Wales and eight farms in Cumbria still under restrictions.
Restrictions on hundreds of Welsh and Cumbrian sheep farms dating back to the Chernobyl nuclear disaster have finally been lifted - 26 years on.