While the front lines have mostly quietened, large parts of the country's north remain outside government control, and no political solution has yet been reached to the 12-year-old conflict.
"Government delegations from the Syrian Arab Republic will resume their participation in Arab League meetings" starting Sunday, said a unanimous decision by the group's foreign ministers.
Assad has been politically isolated since the war began, but recent weeks have seen a flurry of diplomatic activity ahead of an Arab League summit in Saudi Arabia on May 19.
The ministers in a statement emphasised their "keenness to launch a leading Arab role in efforts to resolve" the Syria crisis.
They agreed to form a ministerial committee to continue "direct dialogue with the Syrian government in order to reach a comprehensive solution".
Ahmed Aboul Gheit, head of the 22-member Arab League, said the decision "brings the Arab side into communication with the Syrian government for the first time in years, in order to look into all aspects of the problem".
Syria's return to the body is "the beginning... not the end of the issue", he added, noting it was up to individual countries to decide whether to resume ties with Damascus.
Following the announcement, Syria's foreign ministry stressed the importance of "Arab cooperation", in a statement carried by state news agency SANA.
"The next stage requires an effective and constructive Arab approach... based on dialogue, mutual respect and common Arab interests", it added.
Several Arab countries cut ties with Syria early in the conflict, betting on Assad's demise, while some including Qatar and Saudi Arabia provided support to the Syrian opposition.
The last Arab League summit Assad attended was in 2010, while the opposition attended the pan-Arab group's summit in Doha in 2013, sparking a furious reaction from Damascus.
Aboul Gheit told a press conference Assad was welcome to attend the summit later this month once invited by host Saudi Arabia.
Regional capitals have gradually been warming to Assad as he has stubbornly held onto power and clawed back territory lost earlier in the conflict with crucial support from Iran and Russia.
The United Arab Emirates, which re-established ties in late 2018, has been leading the recent charge to reintegrate Damascus into the Arab fold.
A February 6 earthquake that wreaked devastation in Turkey and Syria sparked Arab outreach to Assad's government, while intensified regional diplomatic activity has been underway since a March decision by rivals Saudi Arabia and Iran to resume ties in a China-brokered agreement.
"Syria's regional isolation is officially broken," analyst Fabrice Balanche said, calling Sunday's decision a "diplomatic victory" for Assad.
"The earthquake is the best opportunity to get closer without losing face," he told AFP, adding that "Saudi Arabia's concern for Syria is part of the context of reconciliation with Iran."
In April, Saudi Foreign Minister Prince Faisal bin Farhan made the first visit to Damascus by a official from the kingdom since the start of the war, days after Syrian Foreign Minister Faisal Mekdad visited Saudi Arabia, also on the first such trip.
Mekdad has visited a string of Arab countries in recent weeks in a diplomatic push.
On Monday, he attended talks in Amman with foreign ministers from Jordan, Saudi Arabia, Iraq and Egypt to discuss the long-running conflict.
Nine Arab countries including Gulf states met in Saudi Arabia last month to discuss ending Syria's possible return to the Arab League.
Assad is hoping normalisation with wealthy Gulf nations could bring economic relief and money for reconstruction, while analysts say sanctions will likely continue to deter investment.
*This story was edited by Ahram Online