The decision was welcomed by the book's author.
"I am thrilled. It has restored my faith in New Zealand's legal system," Dawe said.
The book's publisher, Penguin Random House, was also delighted with the board's decision.
New Zealand managing director Margaret Thompson said the book's previous R14 rating had denied it the exposure it deserved, and the decision meant the book's intended audience would now be able to access it freely.
"The board's majority decision is a victory for freedom of expression and the right of authors and publishers to deal with the challenging social issues young people face today in high-quality works of literature."
Ms Thompson said the book grappled with important issues, including racism and bullying, that were relevant to young New Zealanders today, particularly teenage male reader.
Into the River would continue to display a parental advisory warning on its cover to help parents assess its suitability for their child.
Family First national director Bob McCoskrie, who started the controversy by sending the book to the Film and Literature Board of Review, expressed disappointment at the "flip-flop decision".
"A dangerous precedent has been set and parents will now feel disempowered and that their concerns will be ignored regarding similar books which they may not want their young teenagers and pre-teens to be reading," he said.
"The irony is that we could not read sections of this book on air or print excerpts in newspapers because it would breach broadcasting and media standards. Yet our children are more than welcome to it."
Board president Don Mathieson released a dissenting opinion, disagreeing with the result reached by the majority.
He believes the book's appropriate restriction is R18, or "at the very least" R14.
Mr Mathieson said he "completely disagrees" with the board's conclusion that the book "does not sensationalise, glamorise or otherwise favourably portray the sex, violence, cruelty, demeaning behaviour and other undesirable conduct which it describes".
However, the board concluded that the book's moral lessons were "clear and explicit".
And it found that the language used was unlikely to cause serious harm.
Auckland Libraries, which submitted to the board that the book should not be restricted, said it welcomed the board's decision.
"We have now started to make our copies available across our region's network of libraries," regional collections manager Louise LaHatte said.
"We have a long list of requests and customers who have been waiting will start to get notices advising they can pick it up from their local library."
