Both had been on a relay hunger strike since June 14 after they were suspended.
A review committee of the varsity recommended revocation of their suspension.
The suspension "stands revoked with immediate effect," an order signed by Vice Chancellor Appa Rao Podile said late this evening.
Pro Vice-Chancellor-1 and varsity spokesperson Vipin Srivastava also confirmed the development.
SC/ST Teachers Forum and others had protested the suspension, calling it an "act of vindictiveness".
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A group of teachers earlier today held a demonstration in front of the varsity's administrative office, demanding immediate revocation of suspension, and also met the VC.
The students were opposed to Podile resuming the duty in the aftermath of Dalit research scholar Rohit Vemula's suicide in his hostel room in January.
Ratnam and Sengupta failed to inform their superiors about their arrest as is required under the rules, the administration said, while the two professors contended that they had informed their respective heads of the department.