Once a symbol of US industrial power, Detroit declared itself broke in July 2013, with $18bn (Â£11bn) worth of debt.
In a letter to to Michigan governor Rick Snyder, the city's emergency manager, Kevyn Orr, said Detroit's financial crisis had been "rectified".
Mr Orr, who resigned from his post, said the city was "poised to grow".
He said ending the bankruptcy proceedings was a "milestone", but cautioned that more work remained.
"If the city takes advantage of this unique opportunity to shed the problems of the past and stays on the path that has been blazed in restructuring, Detroit is poised to grow and thrive for the benefit of its residents and this state for many years to come," he wrote.
On 7 November, US judge Stephen Rhodes approved Mr Orr's plan for restructuring the city's finances, which involved shedding around $7bn of its $18bn in debt and other obligations.
In a letter approving Mr Orr's determination that Detroit should be removed from receivership, Mr Snyder said he agreed that unlike 16 months ago, the city can now meet the basic needs of its citizens.
He highlighted the fact that before bankruptcy proceedings began, Detroit's citizens had to wait, on average, 58 minutes for police to respond to their calls. Now the wait time is 18 minutes.
Furthermore, only 40% of the city's streetlights functioned - and now there are plans underway to replace and relight the city, with "hundreds of new, brighter and cheaper lights installed every week".
However, the city still has a long way to go - and many of the city's pensioners were forced to accept cuts to their future benefits in order to appease creditors.
While the Detroit Institute of Art's famed collection was preserved, other parts of the city - such as a hockey stadium - were turned over to investors.
A news conference is scheduled for 11:00 EST on Wednesday morning in Detroit to discuss further details of the city's exit.
The city of Detroit will start the process of paying off its creditors on Wednesday, as it officially exits the largest civic bankruptcy in US history.