The European Commission has approved billions of euros of Government restructuring aid for AIB.
The European Commission said the aid granted by the Government to AIB and its subsidiary EBS were in line with European Union state aid rules.
EU Competition Commissioner Joaquin Almunia said that AIB's restructuring plan "sets out the right measures for this bank to return to profitability without unduly distorting competition in the (EU's) single market."
AIB merged with building society EBS in 2011 after both were hard hit by the financial crisis. Capital support for AIB, which is now 99.8% state owned, totalled €20.775 billion, the Commission said.
AIB, Bank of Ireland and Permanent TSB Group Holdings are the only three lenders left of the six rescued by the Government since 2008.
Bailed-out lenders must have their restructuring plans approved by European authorities. Bank of Ireland's plan was approved in 2010, while Permanent TSB's is still pending.
Since its bailout, AIB sold its Polish unit to Banco Santander in 2001 for €3.1 billion and its minority stake in Buffalo, New York-based M&T Bank for about €1.5 billion.
It has also disposed of securities firm Goodbody Stockbrokers and asset management unit, and eliminated 2,500 jobs through a programme of voluntary job cuts.
The approved restructuring plan includes a set of commitments which AIB will respect during the restructuring period - until the end of 2017.
Those commitments include targets on cost reduction and a ban on acquisitions.
AIB will also operate "market opening measures" to facilitate the market entry of competitors, comprising a "services package" and a "customer mobility package".
Under the "services package" the bank will provide to competitors access to certain services, such as cash supply and distribution services, and access to market intelligence.
Under the "customer mobility package" it will distribute advertising material on behalf of a competitor to its clients to promote customer switching. The commitments will ensure that the competition distortions brought about by the aid are limited, the Commission said.
AIB's chief executive David Duffy said he welcomed today's announcement by the European Commission.
"AIB has made significant progress and has successfully implemented a number of restructuring measures as the bank progresses with its aim of returning to profitability this year," he stated.
"The bank remains focused on delivering against its strategic objectives, while supporting the ongoing recovery of the Irish economy," Mr Duffy said.
The Commission said it will closely monitor the correct implementation of AIB's plan.