Density limits across all businesses will be removed from 6pm on Friday, while dancing is also allowed once again.
Bans on eating or drinking at hospitality venues while standing have also been removed, while the government has indicated a return to the workplace can take place for employees where possible.
Ticketing and pre-registration requirements for events have also been scrapped.
It comes as the ACT recorded 561 new cases of COVID-19 in the most recent reporting period.
PCR tests accounted for 265 of the fresh cases, while 296 positive results came from rapid antigen tests.
Hospitalisations have also declined, down from 47 patients to 45.
Two patients with COVID-19 are currently in intensive care, with one of them on a ventilator.
The eased restrictions on Friday are among a sweeping tranche of changes coming into effect throughout the next week.
Elective surgery will return from Monday at Calvary Hospital in Canberra's north with a gradual return to full capacity, after being suspended for more than a month there due to a surge in cases of the Omicron variant.
From Tuesday, the mandatory quarantine period of unvaccinated international travellers will shorten to seven days, but exemptions will still be required for unvaccinated people to enter the ACT.
Vaccinated travellers won't have to complete an online declaration form, but testing requirements will still be in effect.
From 11.59pm on February 25, changes will be made to mask requirements for indoor settings, with the ACT government saying further details would be finalised in the coming days.
Exemption requirements will also be removed for all events from next week, but events with more than 5000 people will still be asked to submit COVID safety plans for review.
Chief Minister Andrew Barr said the changes were made after case numbers plateaued in Canberra.
"While we recognise the situation could change if a new variant of concern emerges or there is a surge in cases, this step is designed to minimise the disruption of COVID-19 on our local businesses," he said.
"The winter months will present increased risks, and the ACT government will join national efforts to prepare for a period where our health system may come under significant strain."
Health Minister Rachel Stephen-Smith said the eased restrictions were a sign of cautious optimism about the COVID situation.
"I'm confident Canberrans understand the simple actions and behaviours we can all take to protect ourselves and others," she said.
"It's important to be considerate of those for whom easing of restrictions may create some anxiety."
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