"The University of Memphis has reviewed the appeal submitted by Austin Nichols and has agreed to remove all conditions from his release," the school said in a prepared statement.
Nichols and his family had hired a lawyer in an attempt to gain an unconditional release to transfer anywhere in the country.
Don Jackson, the family's lawyer, told ESPN earlier Tuesday: "There's no legal basis for Memphis to deny a release at this point. This isn't about one school. They have denied the release to over 40 schools."
Nichols, who is 6-foot-9, averaged 13.3 points and 6.1 rebounds last season as a sophomore. He was given a release by the school last week with stipulations after initially asking for the release in late June.
Among the stipulations, Nichols was not allowed to transfer to another school within the American Athletic Conference; was not allowed to go to a nonconference opponent on Memphis' 2015-16 schedule, including Ohio State, Oklahoma, Ole Miss and South Carolina; and was not allowed to transfer to Virginia, Iowa, Providence and Tennessee.
Nichols could still have transferred to the aforementioned schools, but he would have had to pay his own way for his redshirt year in 2015-16.
Sources told ESPN that Virginia is high atop Nichols' list of suitors because of a connection between Nichols' former summer coach, Ernie Kuyper, and the family of John Paul Jones -- whom Virginia's arena is named after. Kuyper runs an event in Memphis called the Jack Jones Shootout.
Virginia, Tennessee and Duke were among the finalists when Nichols chose Memphis out of high school.
There has been no shortage of schools trying to land Nichols.
Duke, Notre Dame, Wisconsin, Marquette, Baylor and Auburn are among those who have requested the release, sources told ESPN.
Nichols will have two years of eligibility remaining after sitting out the upcoming season.
Information from ESPN's Jeff Goodman was used in this report.