President Donald Trump gave Congress the statutory 45-day notice of this move in October as part of a deal that involved Sudan paying $335m (£250m) to US victims of terror attacks.
At the same time Sudan agreed to normalise relations with Israel.
The US put Sudan on the list in 1993 after it was used as a base for al-Qaeda. Its removal should help with vital economic support measures.
The compensation relates to al-Qaeda’s 1998 bombing of the US embassies in Kenya and Tanzania in which more than 220 people died.
But the country was put on the US list after the first attack on the World Trade Center in New York in 1993, when Sudan hosted a number of Islamist militant groups as well as al-Qaeda leader Osama bin Laden.
The designation meant the US stopped Sudan from getting debt relief, and prevented the International Monetary Fund and other global institutions from lending the country money.
In the wake of the attacks in the US on 11 September 2001, Sudan’s security services helped the US Central Intelligence Agency.
But Sudan remained on the state sponsors of terrorism list, as some US politicians were concerned about human rights abuses and the war in Darfur.
There was subsequently a thaw in US-Sudan relations and most economic sanctions were lifted in 2017, but this did not improve the economy as anticipated.
Relations between the US and Sudan rapidly improved after long-serving President Omar al-Bashir was ousted following mass street protests last year.
In October, Sudan agreed to recognise Israel weeks after similar moves by the United Arab Emirates (UAE) and Bahrain.
Last week, Morocco became the latest Arab League country to agree to normalise relations with Israel.
The US still designates North Korea, Iran and Syria as state sponsors of terror.