Caltrans officials made the announcement on Twitter shortly after noon, saying in part, "Great news: #Hwy101 is now OPEN thru #Montecito @SBCounty! Thanks to our crews & contractors who made it happen."
The post, which featured a colorful photo of a stretch of the 101 looking as good as new, noted that some off-ramps remain closed in the area and asked motorists to drive with caution.
VIDEO: River of mud rushes down Montecito street as family scrambles for safety
Video shows mudslide rushing down Montecito street
Much of the town still remains evacuated as mud and muck continues to be cleared out.
Residents and business owners in the town said they welcomed the site of the reopened freeway.
"It's a beacon of hope that we are starting to get back to normal. That we can move forward, as with any event no matter how serious, there's a time when you just want to band together with your community and start to feel normal again," said Angela Johnson, manager of James Perse.
The highway was closed after a major rainstorm ravaged the Thomas Fire burn area of Santa Barbara County on Jan. 9. When the powerful storm hit the area, quick rushes of rain caused the massive mudslides that brought with it debris and boulders.
Devastating mudslides led to the deaths of at least 21 people. Two others remain missing.
Crews worked around the clock clearing drainage areas, stabilizing embankments and repairing guardrails and signs. They also cleaned and swept the highway.
During the shutdown, Amtrak added additional cars to its route between Santa Barbara and points east as travelers increasingly relied on rail service to get around the closure.
With many surface streets also impassable, for a time the only other ground route into the Los Angeles area was a series of smaller mountain highways that added more than three hours to the trip.
VIDEO: Aerial footage of Montecito shows before-and-after view of devastated homes
Before-and-after look at destruction from mudslides in Montecito
The Associated Press contributed to this report.