The new protections kicked in at midnight.
It comes after a sustained low number of coronavirus cases in the region recently.
The changes mean that up to 12 people from 12 households can meet outdoors in a garden or a public place; and physically distancing will no longer be necessary with family and friends in a private home.
Numbers allowed at weddings and funerals will rise to 100.
And, small seated indoor events will be permitted with a maximum of 200 people.
Children’s soft play centres can also finally reopen, however nightclubs must still remain closed.
Commenting on Tuesday, First Minister Nicola Sturgeon said: “The vaccines are changing the game. And that means we can still be optimistic about our chances of much more normality over the summer and beyond.
“As always, all of us have a part to play in beating this virus back. So please, stick with it, and each other.”
Reacting to the changes, South Scotland MSP Colin Smyth said: “We have now been living in the shadow of Covid-19 for more than a year, so the news that restrictions are being eased further will be welcomed by many.
“However, we must not forget that until we are all vaccinated, Covid-19 is still out there and we must take precautions to keep ourselves and our communities safe.
“Moving to Level 1 restrictions will mean more normality but with talk of a third wave, we must remain vigilant.”