Manchester City were banned by the European football governing body in February for breaking financial fair play regulations and breaching UEFA’s club licensing regulations while also being fined £25m.
The dethroned Premier League champions launched an appeal shortly after UEFA’s verdict as they maintained their innocence from the accusation.
CAS’ ruling arrived early on Monday morning, with Pep Guardiola’s men declared winners but will have to pay a £9m fine, a significant reduction from the initial £25m.
"Manchester City FC did not disguise equity funding as sponsorship contributions but did fail to cooperate with the UEFA authorities," read the heading to the CAS statement.
"The CAS award emphasized that most of the alleged breaches reported by the Adjudicatory Chamber of the CFCB were either not established or time-barred," added CAS, which will publish its full written reasons over the coming days.
"As the charges with respect to any dishonest concealment of equity funding were clearly more significant violations than obstructing the CFCB's investigations, it was not appropriate to impose a ban on participating in UEFA's club competitions for MCFC's failure to cooperate with the CFCB's investigations alone."
A jubilant Man City statement added: "Whilst Manchester City and its legal advisors are yet to review the full ruling by the Court of Arbitration for Sport (CAS), the Club welcomes the implications of today’s ruling as a validation of the Club’s position and the body of evidence that it was able to present.
"The Club wishes to thank the panel members for their diligence and the due process that they administered."
Man City will thus be free to compete in the Champions League next season, having mathematically sealed their participation in the competition with a 5-0 trouncing of Brighton and Hove Albion over the weekend. The Citizens currently lie second on the Premier League table, with Liverpool already crowned champions.
