The striker was booked for the fourth time this season in the 2-2 draw with Fiorentina, meaning he was given an automatic one-match suspension, but was slapped with an additional two-game ban for verbally abusing an assistant referee.
But a successful appeal means he will now be banned for a game less and having already served one of the suspended matches, he will return for the Serie A game against Catania, though missing this weekend's clash with Juventus.
The Italian Football Federation issued the following statement:
"AC Milan's appeal against the sanction of disqualification for three days of actual competition imposed on Mario Balotelli following the game between Fiorentina and AC Milan on April 7 has been partially successful, as a result, the penalty will be reduced to a two-game ban with a combined fine of 20,000 euros."
The Italy striker has scored 10 goals in 11 games for club and country in 2013.