The 20-year-old striker was sent off by Mike Jones in Blues' 2-0 win on Saturday.
But an FA Regulatory Commission upheld Blues' appeal for wrongful dismissal.
Adams is now free to play against Bristol City on Sunday, with Harry Redknapp's side needing victory to secure Championship safety.
Blues are 20th in the table and go to Aston Gate two points clear of the relegation zone but with an inferior goal difference to Nottingham Forest and Blackburn immediately below them.
Che Adams will be available to play in Birmingham City's final game of the season after his red card against Huddersfield was rescinded.