The progress the Pacific Island nation had made in holding free and fair elections was cited as the main reason for the policy change, with the minister saying such progress "deserves recognition" from the international community.
"As a consequence of these developments New Zealand will be ending all the remaining travel sanctions we have in place against Fiji," Mr McCully said.
"This is a continuation of our policy to support Fiji's return to democratic rule and reflects our close co-operation with Australia on matters relating to Fiji."
The changes will end New Zealand's travel ban, and remove all remaining restrictions on New Zealand government departments working directly with their Fiji counterparts.
"Lifting our remaining sanctions will allow us to throw our full weight behind supporting Fiji's return to democracy and normalise our relationship with one of our closest neighbours," Mr McCully said.
More than 500,000 people are now registered to vote in Fiji's elections, to be held on September 17.
