In a statement Bishop of Down and Connor Noel Treanor confirmed that Fr Hugh Kennedy had returned to his priestly duty in St Peter's Cathedral.
In July 2011, the Diocese referred information on the priest to the PSNI in accordance with child safeguarding procedures.
Fr Kennedy then voluntarily stepped down. In November last year, after completing an investigation, police confirmed they would not be prosecuting him.
Fr Kennedy remained on leave from duties pending the outcome of a separate church inquiry.
"Following a PSNI investigation and a more recent internal Church review, all relevant agencies, including the statutory authorities, are satisfied that Fr Kennedy should return to ministry," Bishop Treanor said in a statement.
"At no time was Fr Kennedy charged with any criminal offence or allegation nor was he subject to interview by the PSNI.
"I wish to acknowledge and thank all those who supported Fr Hugh Kennedy over the past two difficult years and I ask all to continue to support him and this parish community on his return to ministry."