The violence flared up this weekend when Muslim youths attached a Christian church. The retaliation later happened at a Muslim mosque. So far, 265 casualties have been accounted for, over 17,000 people fled the area due to the violence.
From the BBC, we read the latest update on this story.
Correspondents say the lifting of the curfew will allow Muslim clerics to organise funerals and bury the dead.
People can now leave their houses between 1000 and 1700 local time.
The 24-hour curfew has made it difficult to account for the casualties, but at least 65 Christians and 200 Muslims are believed to have died.
Relief agencies say at least 17,000 have people fled the violence, using army barracks and public buildings as temporary accommodation.
"I feel relatively safer because I'm not hearing any gunshots," one resident, who asked to remain anonymous, told the BBC's Network Africa programme on Thursday morning. The city is in Nigeria's volatile Middle Belt - between the mainly Muslim north and the south where the majority is Christian or follow traditional religions.
The Red Cross said its workers had begun to treat the wounded on Wednesday, the first day aid workers were able to enter the city under the protection of the security forces.
Correspondents say such clashes in Nigeria are often blamed on sectarianism.
However, poverty and access to resources such as land often lie at the root of the violence.