Amnesty said it "has been vindicated" following the legal action
The Standards in Public Office Commission (SIPO) has agreed to retract its demand for Amnesty to return a grant it received in 2015.
The investigation surrounded €137,000 in funding provided by the Open Society Foundations (OSF) - an organisation funded by billionaire George Soros.
SIPO ordered the human rights organisation to return the money because it mistakenly decided the donation was being used for political purposes during the abortion referendum.
Amnesty insisted the funds were instead used for a campaign to convince the Government to secure a commitment to changing abortion laws here, not the referendum campaign itself.
The High Court has now heard that SIPO accepts its decision was "procedurally flawed".
Confirming that the decision was quashed, a SIPO representative said that it "does not intend to take any further steps with regard to the OSF grant".
Amnesty International Ireland Executive Director Colm O'Gorman welcomed the decision, saying the organisation has been vindicated.
He explained: "[SIPO] also agreed to pay a contribution towards our legal costs in taking the case against them; they've acknowledged that the investigation was the result of third-party complaints that it received about the grants; and they've also corrected the public record.
"We've been fully vindicated before the High Court today. The decision has been quashed, and now we need to move to ensuring that Government reforms this law - it is a quite extraordinarily restrictive law."
Amnesty argues that current electoral law here "imposes a blanket ban on overseas donations and very severe limits on domestic donations" due to "vague wording and overly broad application".
It called on the Government to "urgently act" to amend the law - a call echoed by the Irish Council for Civil Liberties.
The ICCL says that "laws intended to regulate undue foreign influence on election campaigning cannot be applied to the more general advocacy work of civil society".
In a statement, the Department of Housing, Planning and Local Government said it 'noted' the settlement between the human rights organisation and SIPO.
The statement adds: "The establishment of an Electoral Commission could bring significant change to the oversight of the electoral system in the State and a regulatory impact assessment is under development in the first instance which will identify and compare a number of policy options for the establishment of the Commission.
"It is anticipated that proposals will be brought to Government for its consideration in the autumn."