The US Navy introduced the alcohol ban and restrictions on leaving base for sailors in Japan on June 6 after one was arrested for allegedly driving while intoxicated and injuring two people.
The United States has been under intense pressure to rein in crime by its military and related personnel after a series of other incidents on Okinawa, including the suspected rape and murder of a 20-year-old local woman.
Sailors, however, are not permitted to drink at off-base bars or restaurants.
"We are taking this latest step because our sailors have demonstrated that they understand the strategic impact of their performance on liberty," Vice Admiral Joseph Aucoin, commander of the US 7th Fleet, said in the statement.
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On a visit to Japan last month, US President Barack Obama vowed improvements after a civilian base employee was arrested in connection with the alleged rape and murder.
US officials have grown increasingly concerned that the behaviour of its troops could jeopardise support among Japanese for their security relationship.
Rear Admiral Matthew Carter, who commands the US Navy in Japan, stressed that out-of-control drinking threatened to harm ties.
"We must all be on the lookout to step in before alcohol-related incidents jeopardise our relationship with Japan," he said.
The decision to loosen the drinking regulations came a week after the navy said that sailors free to leave base, however they must submit details about their planned activities.