The Cowley Road Carnival will now go ahead in July, the county council confirmed today.
The popular East Oxford event, which attracts around 30,000 people, was set to be cancelled for the second time in three years because of roadworks in neighbouring Iffley Road.
But highways officials have confirmed the road will be closed on July 3 to let the carnival take place.
The work schedule on Iffley Road will be temporarily altered and traffic management measures introduced to ease congestion on the day.
Oxfordshire County Council's cabinet member for transport, Rodney, Rose said: "We have met with carnival organisers and our colleagues in the city council.
“We all share a desire to see the carnival go ahead in traditional fashion, which means closing the road in some shape or form.
"Undoubtedly there are logistical issues to overcome but we have found a way to accommodate both the carnival and the much needed work to reconstruct Iffley Road this summer."
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