George suffered a concussion in a Game 2 loss to Miami on Tuesday night that evened the series at 1-1.
He will participate in the team's shootaround Saturday morning and, barring any complications, will be in the lineup against the Heat.
"Under the care of the Indiana Pacers' medical staff, Paul George has spent the past three days engaged in the NBA's Return-to-Participation Exertion Protocol as part of the NBA's Concussion Policy," the Pacers said in a statement. "George remained symptom free after each step of the process. The Pacers staff consulted with Dr. Jeffrey Kutcher, the NBA's Director of Concussion Management, throughout George's progress through the protocol and Friday cleared him to return to normal basketball activity."
The NBA's concussion policy states that once a player is diagnosed, he needs to be "held out of all activity until he is symptom-free at rest" and until neurological signs return to normal. George had to go through tests of increasing exertion before being cleared.
George had said earlier Friday at practice that he felt 100 percent and that he had been "symptom-free" for two days.
The two-time All-Star was injured in a collision with Miami's Dwyane Wade midway through the fourth quarter of Game 2, which was won by the Heat 87-83 in Indianapolis.
The Pacers star remained facedown after a play that resembled more of a football tackle than a scramble for a loose ball. Wade also remained down before limping to the Heat's bench.
After the game, George told reporters he "blacked out" and had blurred vision after he was hit in the back of his head by Wade's knee -- descriptions team doctors said they were unaware of when George returned to the court.
"I probably should have kept that to myself," George said. "It just made a mess. That's something that, going forward, just keep that between myself and the training staff."
Based on his descriptions and further examination Wednesday, team doctors said George would be subject to the league's concussion protocol.
George wore a red jersey and was limited to noncontact drills at Thursday's practice, taking shots and making a dunk before leaving the court. He was not available to reporters after practice, and coach Frank Vogel made it clear that George did light work only.
George's teammates said they never imagined he had a head injury.
"I know he fell. I thought he hit his face, but like I said, he was cool," power forward David West said. "I didn't know he was hurt."
Following a timeout, George and Wade both returned to the floor and finished the game. That prompted questions about whether Pacers doctors should have been more cautious with George and whether players are honest with team doctors in similar situations.
The NBA said the Pacers followed league policy.
Point guard George Hill went through a similar experience in last year's East semifinals against New York, missing Game 5 before returning for Game 6.
Hill said the toughest tests he had to pass were on the treadmill and on the court.
But he doesn't believe George provided incorrect information to the doctors so he could continue to play.
"He was honest at the time, he didn't feel anything until after, and I think in that case your adrenaline is pushing so high that you just don't really realize until you actually sit down," Hill said. "I think he was very honest as to how he felt. I think our training staff did a great job asking questions."
George is averaging 21.5 points, 8.1 rebounds and 4.1 assists during the playoffs while rarely leaving the court, averaging a team-high 41.3 minutes per game.
The Associated Press contributed to this report.
All Eyes On George For Game 3
Josina Anderson discusses the status of Paul George and the dialogue that has begun about concussions in the NBA as a result of his injury.
Paul George Cleared To Play
Pacers forward Paul George has been cleared to play after suffering a concussion in Game 2 of the Eastern Conference finals.