"The prime minister ordered that the curfew in the city of Baghdad be completely lifted starting from this Saturday," Maan, the spokesman for the Baghdad Operations Command, told AFP.
The move came after Abadi visited the operations command yesterday and was briefed on the security situation and the status of operations, Maan said.
Lifting the curfew is a major change to a longstanding policy aimed at curbing violence in the capital by limiting movement at night.
The decision to lift the curfew comes as Iraqi forces battle to regain ground from the Islamic State group, which spearheaded an offensive that overran large areas north and west of Baghdad last June.
While the capital is no longer under threat of a major assault by the jihadists, it is still hit by frequent bombings.