The 28-year-old was shown a red card in the 4-0 defeat at Stamford Bridge for denying Samuel Eto'o an 'obvious goal-scoring opportunity'.
A Football Association statement released on Tuesday read: "Following an Independent Regulatory Commission hearing today, a claim of wrongful dismissal concerning Tottenham Hotspur's Younes Kaboul was upheld. Kaboul was dismissed for denying an obvious goal-scoring opportunity during the game against Chelsea on 8 March 2014.
"The player's one-match suspension has therefore been withdrawn with immediate effect."Tim Sherwood's side was already 1-0 down when Kaboul was adjudged to have fouled Eto'o in the penalty box, and the Frenchman was dismissed by referee Michael Oliver before Eden Hazard netted the spot kick.
The Spurs manager disagreed with the decision after the game, stating in his post-match television interview: "It's not a penalty and not a sending off, but the game was finished after that."
Sherwood did criticize his players for the nature of the defeat, however, and believes his side need more "guts" and "character" in order to challenge for a Premier League top-four finish.
"You can't legislate for the capitulation - you can't have that," he said. "There's a lack of characters, too many of them are too nice to each other and you need to show a bit more guts and not want to be someone's mate all the time. They need to drag it out of each other."
Spurs currently sit four points behind fourth-placed Manchester City in fifth, but having played three games more than Manuel Pellegrini's men.