Canada, however, will maintain restrictions on exports of nuclear goods and technologies and anything that could help Iran in the development of ballistic missiles, it said.
And it will maintain a list of people and entities with which dealings are prohibited due to concern over their "relation to the risk of proliferation and to Iran's ballistic missile activities."
"Canadian companies will now be able to position themselves for new trade opportunities, but we will also maintain rigorous controls on any exports that raise serious proliferation concerns," Trade Minister Chrystia Freeland said in a statement.
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Canada's exports to Iran peaked at Can$772 million (US$556 million) in 1997 and declined to Can$67 million (US$48 million) in 2014, comprising mostly food products exempt from sanctions.
Ottawa has also offered to restore diplomatic relations with Tehran, which were severed in 2012.
At the time, the previous Tory administration issued a strongly worded attack on the Islamic republic's support for Syrian President Bashar al-Assad's regime, its "incitement to genocide" against Israel, and its leaders' failure to account for their nuclear program.
Ties were also strained by Tehran's jailing of Iranian-born Canadians. Iran does not recognize dual nationality and authorities have denied Canadian detainees consular protection.
In 2013, Ottawa imposed a near-total trade embargo on Iran that included economic sanctions and travel restrictions against 78 officials and 508 organizations.