A two-member divisional bench consisting of Justice Riaz Ahmed Khan and Justice Noorul Haq Qureshi announced its judgment on an appeal filed by Ashraf against his dismissal last July.
"Zaka Ashraf has been reinstated as board Chairman with immediate effect by the court and he can take charge from tomorrow," Afzal Kundi, Ashraf's legal counsel told reporters.
The IHC bench removed Ashraf last July on a constitutional petition declaring the elections in which he was voted in for a four-year term as "malafide" and "illegal."
After Ashraf's dismissal, the government appointed Najam Sethi as acting chairman but the same bench later also stopped him from exercising his full powers and ordered him to hold fresh elections.
With no elections in sight the government appointed a strong interim management committee with Sethi as its head to oversee cricket affairs.
"With this judgment the interim management committee also ceases to exist," Kundi said, adding that the operational part of the judgment made it clear that Ashraf had been restored unconditionally to his old position.
Ashraf told reporters in Lahore that he was elated with the decision and it was vindication he was elected constitutionally and properly in the first place.
"I hope everyone accepts this decision wholeheartedly and we can start working for the betterment of Pakistan cricket. I plan to go to office in two days' time," he said.