Emergency zones in the Hawkesbury district began to be reduced in size from Thursday, meaning that many of the properties that were inside the area will no longer need permits to move birds and other poultry products.
The quarantine was implemented in June after avian influenza was found at two farms in NSW, leading to the destruction of more than 320,000 animals to try to curb the outbreak.
The strain found in NSW was different to the one located in Victoria, where more than one million birds were killed in response.
NSW Agriculture Minister Tara Moriarty on Friday thanked the poultry industry for helping control the outbreak "so swiftly" but encouraged farmers to remain vigilant to avoid any downturns.
"Their exceptional efforts and vigilance in reporting, adhering to biosecurity measures and cooperating with the biosecurity emergency orders has allowed these zone changes," she said.
"This collective effort has been crucial in protecting the health and safety of our poultry and egg industries."
Victoria scrapped similar restrictions a fortnight earlier and no new cases of avian influenza have been detected in that state since June 24.
The H7N8 strain had infected the NSW farms, while Victorian properties had the H7N3 and H7N9 strains.
NSW's emergency order to manage bird flu in the ACT has also been revoked.
A single case was found at an ACT poultry farm, linked to one of the affected properties in NSW.
The strains are different to the H5N1 strain of the virus that has devastated bird populations worldwide.
Australia is the only continent free of the highly pathogenic strain and NSW Environment Minister Penny Sharpe said she was very concerned that it could enter local wildlife populations through migratory birds.
"I can't overstate how serious this is, things like the little penguin colony at Manly could be wiped out by this," she told a budget estimates hearing on Thursday.
People were urged to keep their pets away from any sick or dead birdlife they saw in case the virus spread via animals, as well as reporting any suspicious finds to authorities.
"We just don't have enough people to manage it if there becomes a serious breakout," Ms Sharpe said.
The NSW response to the recent bird-flu outbreak included more than 4000 samples being tested, along with 76,000 text messages being sent to property owners and 1500 targeted letters being sent to backyard bird owners.
Experts say the disease does not pose a risk to human health, with correct poultry preparation methods required to avoid illness.
It had been feared the outbreak would lead to an egg shortage, with some supermarkets implementing limits on the amount of cartons customers could buy.
