Officials gave the order after 21 days had passed in Sixian village, Guangdong province, without the discovery of any new bird flu cases in poultry, the Xinhua news agency reported.
It added that no human cases of bird flu had been found in the area since the outbreak started with the deaths of 9,830 ducks in the village early last month.
After the village was quarantined, local authorities culled more than 150,000 domestic fowl and closed 68 markets selling poultry and related products within an area of 13 kilometres (eight miles), Xinhua said.
In response to the outbreak, Hong Kong slapped a 21-day ban on imports of all live poultry, eggs and chilled or frozen meat from farms near the affected area.
The H5N1 strain of bird flu has killed about 200 people and ravaged poultry flocks worldwide since 2003, according to the World Health Organisation.
The virus has so far infected at least 25 people in China, 16 of whom died.