The Hollywood star has received clemency for a 1996 conviction for cocaine possession and carrying a weapon. He was given a pardon by California Governor Jerry Brown as part of a Christmas tradition.
The one-time movie bad boy was one of 91 people granted pardons for criminal convictions on Thursday, as part of a regular practise by the Democratic governor of California around Christmas and other Christian holidays.
The former convicts had demonstrated that they had rehabilitated themselves and remained out of custody for at least 10 years, Governor Brown's office confirmed on Thursday.
Downey was first arrested in 1996 after a concealed gun and drugs were found on his person when he was pulled over during a traffic stop.
In court later that year, he pleaded no contest - the equivalent of a guilty plea in California - to possession of cocaine, driving under the influence, carrying a concealed weapon with a prior conviction and being under the influence of heroin.
He later served a year and three months in prison after violating his three year probation, completing his sentence in December 2002.
Governor Brown said in his Christmas Eve clemency message that Downey "has paid his debt to society and earned a full and unconditional pardon."
US media have described Downey as a success story for addiction rehabilitation.
Even before his arrest, the actor's legal troubles and his addiction to cocaine and heroin had threatened to derail a promising career, which included an Oscar nomination for his role as silent film star Charlie Chaplin in the 1992 movie "Chaplin."
But after his comeback, he became one of the most bankable stars in Hollywood, playing a billionaire-turned-superhero as the title character in the "Iron Man" movie franchise and earning another Oscar nomination for his role in the 2008 comedy "Tropic Thunder."
The pardon does not erase records of a conviction, but it restores voting rights, the right to serve on a jury and is a public proclamation of a former convict's exemplary behavior.
Brown, the state's longest-serving governor has now issued 1,087 pardons, including 683 over the past five years, according to his office.
mm/jm (AFP, AP, Reuters)