The Portuguese star was sent off during last weekend's defeat to rivals Barcelona for two bookable offences with the second given for a late challenge on Carles Puyol.
Figo was due to miss the trip to La Riazor because of suspension, but referee Alfonso Perez Burrull has now changed his mind over his sending off.
"I'm very happy about the decision," Figo told radio station Cadena Cope. "I can now play on Saturday and help the team against Deportivo.
"I don't think the referees act in a premeditated fashion but they make mistakes more because of the pressure they're under."
The decision to rescind Figo's sending off received an angry response from both the Valencia and Barcelona camps.
"I was astounded," Valencia midfielder David Albelda told Radio Nou.
"It's incredible. Why don't Madrid just keep the league title and let them celebrate?"
Barcelona captain Philip Cocu was also at odds to understand how Figo had escaped a suspension.
"I've seen Puyol's ankle and the stud marks and bruises that are there," said Cocu.
"He didn't injure himself... The committees seem to make some odd decisions sometimes."
