Badr Abdel-Atty, Egypt's foreign ministry spokesman, said the pair has been cleared to leave Egypt "within hours."
"The prosecutor general has informed us that they are free to leave the country after the accusations against them were dropped," Abdel-Atty told The Associated Press.
Abdel-Atty said the prosecutor has ended the interrogation with the Canadians and has decided to cross their name out from the list of those banned from travelling.
He said instructions have been conveyed to ports and the interior ministry to remove their names from the list of people banned from leaving the country.
A spokeswoman for Canada's junior foreign affairs minister said that efforts continued Thursday to ensure the two men are able to leave Cairo.
"Canadian officials continue to work tirelessly to facilitate Dr. Loubani and Mr. Greyson’s departure from Egypt," Adria Minsky said in an email. "We look forward to seeing these two Canadians return home shortly."
Minsky is a spokeswoman for the minister of state for foreign affairs, Lynne Yelich.
John Greyson, a Toronto filmmaker and professor, and Tarek Loubani, a physician from London, Ontario, had checked in for a flight to Frankfurt, Germany, last weekend. They were prevented from boarding after their names appeared on a "stop-list" issued by prosecutors.
The pair had just been released after being held without charges since Aug. 15, when they were arrested while observing a pro-Morsi demonstration in Cairo in which the Canadians said they saw at least 50 protesters killed.
Abdel-Atty said the two were accused of participating in illegal protests and or resisting authorities during arrest, like many others who were arrested on Aug. 15 by the Fatah mosque, where supporters of the ousted President Mohammed Morsi were holding a rally.
"This was not a political matter. It was purely a legal issue. The judiciary is independent and no one had the right to interfere in their work," he said when asked if this affair has negatively impacted Egyptian-Canadian relations.
The two Canadians said Loubani heeded a call for a doctor and began treating wounded demonstrators while Greyson recorded the unrest on video. They said they were arrested and beaten after leaving the scene of the protests.
The pair released a statement from prison last month saying they were beaten and subjected to degrading treatment in the Egyptian prison. They said they spent most of the time crammed with other inmates in a filthy, cockroach-infested prison cell.
The pair staged a 16-day hunger strike to try to pressure Egyptian officials to release them, but started eating food again last week.
Canadian Foreign Minister John Baird had warned Egypt that their detention was a significant threat to relations between the two countries.
--Associated Press writer Sarah El Deeb in Cairo contributed to this report.
--With files from The Canadian Press