Tourists from the EU, the US and several other countries will no longer need visas to enter Yugoslavia during the summer season.
Instead, visitors will be given a "special tourist pass" at border crossings when entering the country - valid for 30 days.
The decision is meant to attract holidaymakers, although the country's chief tourist destination is a stretch of Adriatic coast in the federation's smaller republic, Montenegro.
A statement from the Government said that until September 30, "tourists from the European Union, Switzerland, Norway, Poland, Slovakia, Czech Republic, United States, Canada, Australia and New Zealand can enter our country without visas".
It is not known if it affects business travellers.
Strict visa requirements remain in place for Yugoslavs wanting to enter EU countries, the US and many other countries.