The Colts committed a league violation by having Bradshaw take handoffs during a morning walk-through practice on Aug. 4.
After that practice, Colts coach Chuck Pagano tried to downplay Bradshaw's participation when asked about the running back's status, saying he was simply taking "mental reps."
Pagano on Tuesday framed Bradshaw's activation as a mutual decision.
"We just had discussions with the league concerning Ahmad's status and we all agreed it was the best thing to bring him off PUP at this time," he said.
He said Bradshaw would have been activated soon "regardless."
"He feels great. If it was left up to him, he would want to go today, but we're going to protect him from himself and bring him along like we always said we were going to bring him along," Pagano said.
"He'll be day to day. Good thing is, he'll be out there. He'll be with his teammates and preparing as if he was going to play, just not going to get the reps right now."
Bradshaw confirmed later Tuesday that he "feels great" but he and the team would take it slow to prepare him "to be ready for the pounding."
"I feel like I'm ready to go. We just want to take it slow and make it last all season," he said.
Bradshaw, who signed with the Colts during the summer after spending his first six seasons with the New York Giants, has spent the first part of training camp working his way back from offseason surgery on his right foot. He rushed for 1,015 yards and six touchdowns last season with the Giants.
Second-year running back Vick Ballard started the final 12 games last season and has worked with the first unit in training camp.
Meanwhile, the Colts also activated linebacker Pat Angerer from the PUP list. Angerer, the Colts' top tackler in 2011, also had offseason surgery on his right foot.
Information from The Associated Press was used in this report.