The decree signed by President Tabare Vazquez and Defense Minister Jose Bayardi lifts the ban imposed by the 1973-85 military dictatorship.
The decree was published Friday on the presidential Web site and states that sexual orientation will no longer be considered a reason to prevent people from entering the military.
Vazquez said the "state does not discriminate against citizens for their political view or for their sexual choice" during a visit Thursday to the Paraguayan capital of Asuncion.
The law had included homosexuality among the "mental illnesses and disorders" that make a person unsuitable to join the armed forces.
my little sister is fluent in spanish and wants to teach english in a foreign country. she wants Chile, I keep telling her to go for Uruguay. They're like the adorable little bellybutton of South America.