Prime Minister Naftali Bennett and Health Minister Nitzan Horowitz agreed to cancel the restriction on gatherings that has limited events in open places to 5,000 people, Xinhua news agency quoted an official statement as saying.
Starting from Friday, gatherings in open places "may be held without limits on attendance", the office said.
Outdoor events would still need to operate under the Green Pass, a measure that Israel began enforcing on October 17.
The Green Pass restrictions limit entry to various public venues, including restaurants, cinemas, conferences and hotels.
On Sunday, Bennett told Israel's weekly cabinet meeting that the country is "currently exiting from the Delta wave".