"We had a very productive discussion," NFL commissioner Roger Goodell said in a statement. "Sean fully complied with all the requirements imposed on him during his suspension.
"More important, it is clear that Sean understands and accepts his responsibilities as a head coach and the vital role that coaches play in promoting player safety and setting an example for how the game should be played at all levels.
"We are committed to delivering football that fans love and the safety players deserve. Coach Payton agrees and I look forward to working with him going forward to do that."
Payton can resume his coaching duties immediately, although the Saints have finished for this season, which ends with the Super Bowl, in New Orleans on Feb. 3
Goodell and Payton held a meeting on Monday at which time the Saints coach acknowledged his responsibility for the actions of his coaching staff and players.
Payton's reinstatement closes one chapter in the ugly scandal that hung over the Saints the entire season.
During Payton's absence, the Saints went from a 13-3 team that won the NFC South division title to a 7-9 team that missed the playoffs altogether.
Payton, along with members of his coaching staff, general manager Mickey Loomis and several players were handed varying suspensions for their roles in the team's bounty scheme that saw players given cash rewards for injuring and knocking opponents out of games from 2009-2011.
"I am thankful today commissioner Goodell has granted me reinstatement," Payton said in a statement released by the Saints.
"As I stated back in March, 'I, along with Mickey Loomis, take full responsibility for all aspects of our football program.'
"I clearly recognize that mistakes were made, which led to league violations. Furthermore, I have assured the commissioner a more diligent protocol will be followed.
"I am excited to be back as head coach of the New Orleans Saints!"
A former Super Bowl-winning coach, Payton signed a five-year contract extension last month that will run through the 2017 season.
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