The taxi app giant had faced being banished from the city over concerns raised by the local authority.
It is currently fighting moves to rid London and York of Uber cars.
Earlier this month, local officials said Uber's licence had been suspended after it failed to respond to requests.
Uber said it had not received the correspondence the council referred to as it had been sent to the wrong address.
Sheffield City Council will now consider a new licence application submitted by the Silicon Valley firm.
"The new application, made by Uber in October, to operate private hire cars in Sheffield is being considered and a decision will be made in early 2018," the council said in a statement.
The shock move comes weeks after Uber was banned from serving London.
Transport for London said Uber was “not fit and proper” to run.
But the firm is still operating in the capital after it appealed the ruling. That case will be decided next year.
