When lower-ranked rider Paul Hart was chosen in his stead for the sole South African eventing spot, Peternell launched a lengthy battle that took him to the Court of Arbitration for Sport in Lausanne, Switzerland.
The court on Tuesday upheld his appeal.
"I am very excited to say that I am sitting in Greenwich in the stable area with my horse Asih," Peternell said.
South African sports authorities chose Hart instead of Peternell to represent the country in eventing, which tests horses and riders in dressage, cross-country and jumping, citing the fact that Peternell lived and competed from Britain.
"As we all know, this athlete has been based in the United Kingdom for the last 11 years consecutively," Tubby Reddy, chief executive of the South African Sports Confederation and Olympic Committee, said.
"It is indeed a very sad day for us as a country to be instructed to select an athlete into Team South Africa against our will, but being a disciplined member of the Olympic Movement we have no option but to adhere fully to this decision."
Reddy expressed regret that Hart - "one of our loyal countrymen" - had to suffer the consequences of this decision.
Peternell, who intially trained as a ballet dancer, acknowledged he has been based in Britain since he finished school.
Britain and Continental Europe play host to many of the world's top equestrian competitions and a number of leading riders, including veteran eventing champion Mark Todd who rides for New Zealand, also call Britain home.
Peternell said he moved to Britain to further his goal of being the strongest possible competitor for South Africa.
"I wanted to be the best rider I could be and to achieve that, you have to go where the best riders are. Unfortunately, that's Europe," he said.
"I left all my friends and family at home and I worked very hard for very many years to achieve this goal and I am absolutely thrilled that it's all paid off and now I can hopefully make my country proud."