The regional court in Frankfurt overturned the ban after ruling that the request for an urgent injunction against Uber's operations by taxi industry body Taxi Deutschland had been submitted too late.
In a statement, Taxi Deutschland said it would appeal against the judgment.
"For us everything clearly ran within the permitted time for an urgent procedure: Firstly we had to prove UberPop’s infringement of rights through test journeys," Taxi Deutschland said. "These were possible for us from July. Secondly Uber Germany declared that it was not responsible, which meant that we had difficulty in determining the right addressee for our interim injunction - Uber in Amsterdam. It is a shame that the regional court thinks that such procedures could have been brought more quickly."
"This ruling does not mean that the assignment of taxi-like journeys to private drivers without approval is legal. On the contrary the regional court said clearly in its first decision that this practice is unlawful. Today’s ruling did not withdraw this legal appraisal. The fact therefore remains: Uber is acting unlawfully! The taxi industry accepts competitors who comply with the law. Uber doesn’t do that. Therefore we today announce that we will be appealing without delay," it said.
Uber enables users of its UberPop online application to book a car ride from a network of individual drivers not affiliated with official taxi companies. The company operates in a number of major cities across the world, including New York, London, Shanghai and Sydney. It has come in for criticism from taxi drivers in a number of cities as a result of the potential disruption they see to their market.
In a statement, Uber said that its UberPop app "is revolutionising transport in cities and beyond by helping to create smarter cities with more transport choices" and that it is planning to double the size of its business before the end of 2014 and expand into more German cities, according to a report by the BBC. In Germany, Uber already operates in Berlin, Dusseldorf, Frankfurt, Hamburg and Munich.
According to a report by the New York Times, Pierre-Dimitri Gore-Coty, Uber’s regional general manager for northern Europe, said: "This is an industry that doesn’t want to see competition. Incumbents will try to find any legal way to stop companies like Uber from competing."
Earlier this month a district court in Frankfurt said Uber should be banned in Germany because it operated in breach of Germany's Passenger Transport Act. The company failed to obtain necessary permits for its drivers, it ruled.
In a statement at the time Uber said that it would continue providing its services to German users and would appeal against the court injunction served on it.
Taxi Deutschland has previously referred to Uber as a "locust" and has claimed that Uber can pay less tax than official taxi companies because of its operating model. It also alleged that Uber offers less consumer protection than the taxi companies do because of the fact Uber's drivers have not had to obtain permits.