Egypt was suspended from the 54-member pan-African bloc last July, after former president Mohamed Mursi, the country's first freely elected president, was ousted by Abdel Fattah al-Sisi in a coup.
The AU's Peace and Security Council agreed to reinstate Egypt after a meeting late Tuesday, even though the organisation's regulations hold that the governments of member states must be democratically elected.
Sisi overwhelmingly won last month's election, which was boycotted by Mursi supporters and secular dissidents.
Chergui said all members agreed on the decision to readmit Egypt, despite the controversy surrounding the vote.
"We all think that the election was fair and he's sworn in," he said, adding that the AU will support upcoming parliamentary elections and seek to strengthen human rights and press freedom in the country.
The AU also readmitted Guinea Bissau, which was suspended following a military coup in 2012.
The only African country that remains blocked from the AU is Central African Republic.
Sisi is Egypt's second elected president since the overthrow of longtime strongman Hosni Mubarak nearly three years ago, which plunged the country into turmoil.
Thousands of Mursi supporters have been jailed since Mursi was ousted and scores of journalists arrested.
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