Harbhajan was reported for a suspect action when bowling his 'doosra' delivery by match officials during the second Test against Bangladesh in Chittagong in December.
The doosra is a delivery that spins away from a right-handed batsman, the opposite direction to an off spinner's stock ball.
The ICC said they had received a report from the Board of Control for Cricket in India (BCCI) that confirmed the "bowling action for both his off-spinner and 'doosra' falls within the tolerance threshold prescribed in its new regulations".
The ICC introduced a new threshold on March 1 allowing all bowlers to straighten their arms by up to 15 degrees.
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Harbhajan, who has been named in India's squad for their Test series against Pakistan starting next Tuesday, worked with a biomechanics expert from the University of Western Australia to correct his action.
He had been reported once before, in 1998, for a suspect action.
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