President Sebastian Piñera has dismissed his whole cabinet in order to form a new government and introduce social reforms demanded by protesters. He also announced that a curfew imposed in cities across Chile a week ago had been lifted.
Meanwhile, the opposition has called for the state of emergency to end too.
Earlier in the week, Pinera declared a state of emergency across much of Chile and put the military in charge of security in the capital Santiago and other cities.
On Friday, more than a million people joined a peaceful rally in Santiago, calling for social justice.
Protests began in Chile over an increase in subway fares more than a week ago and escalated into riots. At least 17 people have been killed and more than 7,000 people arrested during the protests.