Shahid Karim said a civil court judge had lifted the ban and fine, which were imposed following a probe into alleged match-rigging, declaring them illegal.
"It's decided that the imposition of penalty and life ban were beyond the powers of the PCB (Pakistan Cricket Board) and could not have been done and had no legal basis," Karim said.
Malik, who played 103 Tests, was banned by the board in 2001 on the recommendations of a judicial inquiry commission, which carried out a 18-month probe into allegations of match-fixing made against Pakistani players.
The commission recommended a life ban for Malik and fines on other senior players including Wasim Akram, Inzamam-ul Haq and Waqar Younis.
Malik had challenged the ban in the Supreme Court, which referred the case to the civil court.
"It is a big day for me," Malik told Reuters. "I am overjoyed that finally this stigma of match fixing is gone."
Malik said he would be discussing the possibility of filing a lawsuit for damages against the board.
"I am relieved to be exonerated of these charges," he said. "But I have suffered a lot of mental trauma and loss of reputation in these last seven eight years."
Malik plans to get straight back to cricket and establish his own academy in Lahore.
"Cricket is in my blood," he added. "I had served Pakistan cricket for 19 years before I was banned."
Tafazzul Rizvi, legal counsel for the Pakistan board, said the PCB would abide by the court's ruling.
"If the court has passed an order we will honour it," Rizvi said.
But a senior board official said the detailed court orders would now be sent to the legal counsel of the International Cricket Council (ICC) for study.
"Under the existing terms the legal counsel of the ICC will give his report to the executive board which has to ratify the order after which Malik will officially be cleared of the ban," the official said.