Health Minister Johannes Rauch said the country was "putting an end to discrimination from another age".
Austria has lifted a de facto ban on LGBT+ citizens donating blood, the health ministry announced on Friday.
Citizens will only be prevented from donating blood if they have had sex with three different partners within the last three months, regardless of their gender or sexual orientation.
Previous laws had prevented anyone in Austria from donating blood if they had "risky sex" in the last 12 months. Transsexuals and non-binary citizens were completely banned from donating blood.
LGBT+ activists said the rules had allowed organisations to exclude gay, bisexual and transgender citizens due to the supposed risk of AIDS transmission.
"We are putting an end to discrimination from another age", Green party Health Minister Johannes Rauch said in a statement.
"If someone wants to help by donating, there is no reason why they should be prevented from doing so because of their sexual orientation or gender identity,"
The change in blood donation regulations will come into force "this summer", a government spokesman told AFP.
France, Spain, Italy, and the United Kingdom have all recently lowered the hurdles that prevented LGBT+ citizens from donating blood.