Israel passed a law targeting BDS supporters a year ago, which bans any foreigner who "knowingly issues a public call for boycotting Israel" from entering the country, and lists 20 activist groups whose members can be denied entry.
The Supreme Court accepted Alqasem's lawyers' argument that she had ceased her pro-boycott activity in April 2017, and noted that since then she had engaged in Holocaust studies and had been accepted to a post-graduate program at Jerusalem's Hebrew University, which supported her petition.
Lara Alqasem, 22, of Florida, had been detained at Ben-Gurion International Airport since arriving on October 2.
Ruling on her case Thursday, the Supreme Court of Israel said there was not satisfactory cause to bar her entry.
Alqasem's lawyer told the Supreme Court that Israel should apply common sense when applying the law against BDS supporters.
In March 2017, Israel's parliament passed the law banning the entry of supporters of BDS, a movement inspired by an global campaign against South Africa before the fall of apartheid.
Shortly after Alqasem was detained, Israel's strategic affairs minister, Gilad Erdan, who has led the country's anti-BDS policy, said he would consider letting her in, but only after she personally disavows BDS.
"I'm relieved at the court's decision and incredibly grateful for the work of my incredible and tireless lawyers Yotam Ben Hillel and Leora Bechor as well as the support of my family and friends", she told the Haaretz newspaper upon her release.
"By taking a principled and courageous stand against a wildly escalating power play by the Ministry of Interior, Lara has ensured that no one else should be denied the right to enter Israel based on sloppy Google searches and dossiers by shadowy smear groups", they said. "If this is truly the case, then we are talking about an extreme and unsafe step, which could lead to the crumbling of the pillars upon which democracy in Israel stands".
Alqasem asked Israel's Supreme Court to overturn an expulsion order over her alleged involvement in the boycott movement against Israel.
Ordered to return to the United States, she decided instead to stay in Israel and challenge the ban.
Her lawyers, however, argued that Alqasem "does not meet the evidentiary test of what it means to be an activist", adding that there is "no paper or digital trail" that she is a BDS activist, and that she has made no public statements in support of the movement.
"The fight against boycotts is fitting and vital, as are the actions taken by the State of Israel on the matter".
"I will be happy to say more when I've had a chance to rest and process", she added.
"Lara's case proves that thought-policing has no place in a democracy", they continued.
"Lara served as president of a chapter of one of the most extreme and hate-filled anti-Israel BDS groups in the USA", said Strategic Affairs Minister Gilad Erdan, responsible for Israel's fight against the BDS. "Israel has the right to control its borders, but that right does not give it unchecked power to turn away anyone it deems unwanted".