The move, which was welcomed by the United States, comes as Sri Lanka faces growing pressure -- led by Washington -- over its human rights record, particularly with reference to the Tamil conflict.
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"I am satisfied that there is no need to have the state of emergency any more," President Mahinda Rajapakse said in a speech to parliament.
The laws, which give security forces sweeping powers of arrest and detention, have been renewed on a monthly basis -- with only brief breaks -- ever since they were first imposed 28 years ago.
Rajapakse's announcement means the regulations will lapse at the end of August, but similarly tough powers remain available to authorities under the Prevention of Terrorism Act (PTA).
Opposition leader Ranil Wickremesinghe also welcomed the decision, but said it had come too long after the final military victory over the Tamil Tiger rebels in May 2009.
"For the past one year, we have been asking the government to end the state of emergency," he said.
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