The Zurich Street Parade that attracts nearly a million people who party in the open will be allowed to continue but with conditions, the authorities say.
The festival's future had been hanging in the balance after officials said it was becoming too rowdy and violent. In 2007 an 18-year-old man was stabbed to death by a 17-year-old during the party.
Following the tragedy officials clamped down on the 2008 festival, forbidding city centre business owners from using the streets to open bars and set up speakers. Their doors and windows had to remain closed.
The measures seem to have worked, Zurich city authorities said on Tuesday. For the next three years the party can continue as long as those same conditions are met.
A statistical analysis showed a drop in serious fights during the techno party from 31 in 2007 to 11 in 2008. Security officers arrested 271 people under the influence of alcohol or drugs in 2007 compared with 204 last year. The number of people requiring medical attention dropped from 911 in 2007 to 641 in 2008.