Moscow joined a ban on military hardware sales to Libya shortly after the country plunged into civil war in early 2011.
The Kremlin reversed its decision in one of the last official moves by President Dmitry Medvedev, Russia's state-run news agency RIA Novosti reports.
Medvedev is now serving a second non-consecutive term as prime minister after Vladimir Putin scored a victory in March presidential elections.
Russia's state-run arms exporter Rosoboronexport lost roughly $4 billion in revenue because of the embargo. The company said last year it would look to renegotiate arms sales with Tripoli once the embargo is lifted.
Libya is headed for its first set of democratic elections in a generation later this year. Despite post-war developments, tribal differences and various bids for autonomy in the country are threatening the peace.
Witnesses in Tripoli said Tuesday former rebel fighters armed with anti-aircraft guns fired on the offices of the interim prime minister in Tripoli.
A government spokesman, Ashur Shamis, told the BBC the conflict had ended by Tuesday afternoon and no government officials were injured.