In a hotly-awaited ruling, the Court of Arbitration for Sport said it had found Suarez guilty of assault during Uruguay's World Cup match against Italy.
The decision means that the 27-year-old striker remains unable to make his debut for his new club Barcelona until October 25, but can at least train with his team-mates and be involved in promotional activities.
He is also barred from taking to the pitch with Uruguay for nine consecutive official matches.
Barcelona said that the striker would train for the first time on Friday and be presented to the fans on Monday when the Spanish giants play the Joan Gamper Trophy match at their Camp Nou home.
"The CAS Panel found that the sanctions imposed on the player were generally proportionate to the offence committed," the court said in a statement.
"It has however considered that the stadium ban and the ban from 'any football-related activity' were excessive given that such measures are not appropriate to sanction the offence committed by the player and would still have an impact on his activity after the end of the suspension."
Suarez, accompanied by his lawyers and representatives of Barcelona and the Uruguayan Football Association, had last Friday pleaded his case in person at a closed-door session of the Swiss-based CAS, which is the final court of appeal in the sports world.
Suarez, who has a record of bans for biting opponents, was barred from all football-related activity for four months after biting Chiellini on the shoulder during Uruguay's final Group C game on June 24 in the Brazilian city of Natal.
Uruguay advanced thanks to an 81st minute goal from Diego Godin, sending Italy packing 1-0.
Suarez has already served one match of his nine-game national team ban, having missed Uruguay’s 2-0 loss to Colombia in the World Cup round of 16 on June 28.
- Ban 'disproportionate' -
In addition to suspending Suarez, world football's governing body FIFA has also fined him fined 100,000 Swiss francs (112,000 dollars), and the CAS kept that penalty in place.
FIFA adopted a tough stance at the World Cup because Suarez at first showed no remorse, though its boss Sepp Blatter later dubbed the punishment harsh.
But after being sent home from Brazil, Suarez apologised.
"The truth is that my colleague Giorgio Chiellini suffered the physical result of a bite in the collision he suffered with me," Suarez said on Twitter on June 30.
"I deeply regret what occurred. I apologize to Giorgio Chiellini and the entire football family," he said, vowing that there would never be another incident.
Suarez subsequently left English giants Liverpool for Barcelona, after a 95-million-euro ($127 million) deal with the Catalan powerhouses.
The international players union, FIFPro slammed the CAS decision, claiming the punishment was "disproportionate".
"FIFPro does welcome the fact that CAS has cancelled the four-month ban from all football-related activity, which was unfair to Suarez as it infringed his right to work at club level," said a FIFPro statement.
"FIFPro regrets that CAS has not decided to reduce the length of both playing bans in exchange for an obligation for Suarez to receive treatment."
Suarez and the Uruguayan Football Association turned to the CAS after a failed appeal to FIFA, and were joined by Barcelona in the case.
Barcelona have been anxious to tap the striking skills that saw Suarez notch up 31 goals in 33 matches with Liverpool last season.
Suarez was backed in his appeal by world players' union FIFPro, which had called the sanctions disproportionate, notably because the ban on all football-related activity infringed his right to work for his club.
His lawyers had expressed confidence they would get the ban slashed to two months.
That would have made him available to play from August 25, thereby only missing Barcelona's opening fixture of the season, at home to lowly Elche the day before.
Suarez has never explained his propensity to bite opponents.
He earned a 10-game ban for biting Chelsea's Branislav Ivanovic in 2013, after being sidelined for seven matches with Dutch club Ajax in 2010 for the same offence against PSV Eindhoven's Otman Bakkal.
On Wednesday, English Premier League boss Richard Scudamore said that while Suarez was a great footballer, he was also "an accident waiting to happen".