Announcing the decision, Queensland transport minister Scott Emerson said it was a "common-sense approach" to the issue and only cyclists with "genuine religious beliefs" will be exempted.
"We will introduce exemptions for those who want to cycle but for religious reasons may not be able to wear a helmet," the minister said.
"They just can't wrap a towel around their heads, go ride a bike and claim that's exemption from wearing a helmet," he said. "This is for genuine religious beliefs and for genuine religious exemptions."
The new laws are expected to be in place by the end of this year, according to Australian media reports.
Emerson reviewed the law after Jasdeep Atwal, a Queensland Sikh, successfully challenged a fine because his religion requires him to wear a turban.
Emerson said he had waited for the outcome of court case before making any law changes.
"By amending the Queensland Road Rules, we will join Victoria, South Australia and Western Australia which also have this exemption," Emerson said.
"Similar to Western Australia, there will be no requirement to actually apply for the exemption, which will make for a more streamlined process and reducing the need for unnecessary red tape," he said.
Atwal said the exemption would be welcomed by all Sikhs. "The Sikh community has been working for a long, long time on this and they have done a lot of work. I was just the face of the cause," he said, quoted by ABC News.
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