U.S. Open champion Rose was penalized after his ball was revealed, by high definition television, to have moved very slightly just off the back of the 18th green after he had placed his wedge behind it.
His one-under-par 71 was subsequently adjusted to a 73 and he had been prepared to go into Sunday's final round at the TPC Sawgrass on five-under 211, seven strokes behind co-leaders Martin Kaymer of Germany and American Jordan Spieth.
However, a new rule states a penalty can be waived if a ball movement was not "reasonably discernible to the naked eye at the time" and was identified only through enhanced technology.
After further consultation on Sunday, the game's governing bodies and PGA Tour Commissioner Tim Finchem decided that this was indeed the case, and Rose's 73 reverted back to a 71.
"It was determined that without the use of sophisticated technology, it was not reasonably discernible to the naked eye that the ball had left its original position and had come to rest in its original place," the PGA Tour said in a statement.
"Thus, the player's determination that the ball had not moved was deemed to be conclusive and the penalty does not apply in this situation. Having reached this decision, the committee immediately notified Rose and rescinded the two-stroke penalty."
The initial penalty was imposed after Englishman Rose was preparing to play a chip shot from 20 feet away but, as he addressed his ball, he felt the ground underneath give way and he immediately backed off.
He was convinced the ball had not oscillated but subsequent television replays confirmed via magnification that there had been a slight move - a "quarter of a dimple," according to Rose - toward the toe of his sand wedge.
Both Rose and his playing partner, Sergio Garcia of Spain, looked up at a replay on a giant television screen behind the 18th green and agreed there had been no ball movement.
However, officials later reviewed the incident repeatedly on video in the television compound and Rose was given a one-stroke penalty for his ball moving at address and a further stroke for not replacing the ball after it had moved.
After being told on Sunday that his two-stroke penalty had been rescinded, Rose told the PGA Tour: "I was good with the way everything played out; I want to play by the rules.
"But I was reading an article in the evening and the rule states -- and I'm paraphrasing -- if a player can't discern whether the ball moved or not it's deemed not to have moved.
"I sort of scratched my head and said that's exactly what happened to me and yet I was docked two. But obviously all the governing bodies ... got together overnight to talk about it."
Following the unexpected rules U-turn, Rose teed off in the final round at seven under, just five strokes off the pace.
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