UFC welterweight Nick Diaz will be eligible to fight in 2016.

The Nevada State Athletic Commission unanimously approved a settlement with Diaz on Monday that reduced his original five-year suspension to 18 months. A $165,000 fine was also reduced to $100,000.

The 18-month suspension is retroactive to Diaz's last fight on Jan. 31, 2015. He will be eligible to return on Aug. 1 this year.

During the Las Vegas public hearing, the NSAC voted in favor of the proposed settlement but did not read the conditions. Diaz's manager Lloyd Pierson revealed the terms to ESPN.com. Diaz, 32, did not appear at the hearing.

Nick Diaz (26-9) will be eligible to fight on Aug. 1 after his five-year ban was reduced to 18 months. He hasn't recorded a win since a decision victory against BJ Penn in October 2011. Jeff Bottari/Zuffa LLC/Zuffa LLC/Getty Images

Diaz (26-9) was suspended five years in September after testing positive for marijuana metabolites following his decision loss to Anderson Silva at UFC 183. It marked the third marijuana-related test failure of Diaz's career.

The circumstances surrounding the test were unique, however, in that the NSAC tested Diaz three times on the night of the fight. Two of the tests, which were analyzed at a WADA-accredited lab, produced negative results. A third came back positive.

Initially, the NSAC elected to respect the results of the outlying test and handed Diaz a five-year ban, which commission member Skip Avansino acknowledged at the time was essentially "a lifetime for Diaz."

The NSAC has since changed course. Speaking on why Diaz was tested three times by two different methods, NSAC chairman Anthony Marnell told ESPN.com "that's what happens when you have multiple drug testing parties. That's the honest answer and since that time, that's changed. It was a learning lesson. These are complicated issues but that's since been fixed."

There was a substantial amount of public outcry after the NSAC's original ruling. A petition to the White House demanding the suspension be lifted received more than 100,000 electronic signatures last year.

A former Strikeforce welterweight champion, Diaz hasn't recorded a win since a decision victory against BJ Penn in October 2011. His loss to Silva was overturned to a no-contest, after Silva tested positive for anabolic steroids.

The Stockton, California-based fighter has said he is a medicinal marijuana user. He will have to submit a clean test to the NSAC before he is relicensed.