A government statement said the Omicron variant, while highly transmissible, had seen lower hospitalisation rates than previous waves.
There had been "a marginal increase" in the number of deaths, it added.
The variant - first reported by South Africa last month - is spreading fast elsewhere leading to widespread curbs.
The World Health Organization (WHO) has warned of a "tsunami" of infections from Delta and Omicron variants that could overwhelm health systems.
But in South Africa, the government announced on Thursday that some rules were being relaxed.
A statement released after a special cabinet meeting said cases and hospital admission rates had dropped in almost all provinces across the country.
For the week ending 25 December 2021, the number of confirmed infections stood at 89,781 - down from 127,753 the week before.
The changes announced include lifting restrictions on movement between midnight and 04:00. Businesses will also be allowed to sell alcohol under normal licensing rules, instead of closing at 23:00.