The Iranian Foreign Ministry on Sunday announced that it would allow the US wrestling team to enter the country in order to participate in the Freestyle World Cup competition.
The event was scheduled to take place in the province of Kermanshah on February 16-17, Efe news reported.
After Iran dened visas two days ago, Foreign Ministry spokesman Bahram Qasemi said in a statement that his department had decided to grant the US athletes visas.
This change of decision came after a federal judge issued on Friday a temporary restraining order blocking enforcement of President Donald Trump's executive order banning people from seven Muslim-majority countries from entering the US.
Tensions between the two countries soared after Iran tested a ballistic missile last week and Washington responded with imposing new sanctions against individuals and groups linked to its weapons programme.
Iran reacted to both actions by taking reciprocal measures, and also carried out missile tests, an action condemned by Washington.