But the incident has prompted concern for other water holdings across the state after weeks of persistent rain.
South Australia's State Emergency Service says water levels in the 10 megalitre Echunga dam have dropped by more than two metres, relieving pressure on its walls.
Concerns were raised on Tuesday afternoon after signs of "slippage" along the main dam wall.
Fears of a major collapse grew that night with an emergency warning issued early on Wednesday.
The SES said up to 40 houses would be flooded with at least ankle-deep water if the dam gave way.
Pumps were brought in to reduce water levels and a spillway was cut to allow water to drain away safely.
Some roads at Echunga remain closed but residents were advised early on Thursday the risk of a collapse had reduced and they could return to their homes.
The SES said engineers and swift water rescue officers remained at the scene.
Premier Peter Malinauskas said it was a great relief the situation appeared under control.
"There's still work that remains to be done but all things look like they're on track," he said.
The premier said the government and the SES would discuss mitigating similar risks at other sites.
"With so much rainfall in recent times, this is a situation we're going to have to monitor throughout the state," he said.
"Certainly the events of the last 24 hours have highlighted that this is a situation we need to monitor very closely."
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