The sport's troubled international governing body said in a tweet that the decision had been made "following discussions between host country authorities and FIFA."
It is a remarkable, eleventh-hour policy change for the wealthy Gulf kingdom, which has had 12 years to organize the world's second-largest sporting event, after the Olympics.
This World Cup is already mired in controversy over Qatar's human rights record, its oppression of the LGBTQ+ community and its poor treatment of migrant workers, who built the tournament venues. And this highlights another flashpoint: between this notoriously boozy sport and the conservative, Muslim country hosting it.
It also presents a major headache for major sponsor Budweiser, which has a $75 million advertising deal with FIFA.
FIFA's statement thanked AB InBev, Budweiser's parent company, for its "understanding and continuous support" to "cater for everyone" during the World Cup.
On Friday, after reports that Qatar's alcohol ban was imminent, Budweiser tweeted: "Well, this is awkward..."
When asked for comment, Qatar's Supreme Committee for Delivery and Legacy, which is organizing the event, directed NBC News to FIFA's statement.
It comes just two days before the opening ceremony and the first match between Qatar and Ecuador at the 60,000-capacity Al Bayt Stadium, just north of Doha.
Qatar is ruled by an absolute monarchy, and under its interpretation of Islamic law the sale of alcohol is heavily restricted. It agreed to relax these rules ahead of the World Cup, which it was awarded in 2010 despite concerns over its human rights record and a lack of soccer infrastructure.
FIFA's statement said that alcohol will be served only at designated fan zones, named the FIFA Fan Festival, and other licensed sites.
It said "sales points of beer" will be "removed" from stadium perimeters, meaning the red Budweiser kiosks seen outside the Khalifa International Stadium in Doha, for example, may need to be moved or changed. Bud Zero, the brewer's alcohol-free drink, will still be allowed inside the stadium perimeters, the statement said, meaning that product could still be sold by those vendors.
Sky News, NBC News' British partner, also reported that alcohol will still be available for corporate hospitality.
In many countries, particularly in Europe, soccer still has a difficult relationship with booze. Last year, thousands of rowdy, ticketless England fans, many of them clearly intoxicated, stormed London's Wembley Stadium, marring the final between their team and Italy.
Nevertheless, many fans are disturbed by the idea of such a major event upending its policies so close to the event itself.
"If they can change their minds on this at a moment's notice, with no explanation, supporters will have understandable concerns about whether they will fulfil other promises relating to accommodation, transport or cultural issues," the Football Supporters' Association, a group covering fans in England and Wales, said in a statement.
Qatar has previously said all fans are welcome, including LGBTQ+ people, but that visitors should respect the nation’s culture, in which public displays of affection by anyone are frowned upon.