NEW DELHI — The powerful former chief minister of the southern Indian state of Tamil Nadu, Jayalalithaa Jayaram, on Monday was cleared of corruption charges on appeal, paving the way for a possible return to office.

Ms. Jayaram, 67, who served as chief minister until her conviction in September, had been accused of illegally accumulating about $10 million through shell companies during her first term in the 1990s, when she stated she earned a single rupee per month. After 18 years of court proceedings, she was sentenced in 2014 to four years in prison.

On Monday, the Karnataka High Court reversed a lower court’s conviction, which at the time had been hailed as a blow to political corruption. A search of Ms. Jayaram’s home after the case was filed turned up a gold belt studded with 2,389 diamonds, among other jewels.

“For the prosecution, it is an unexpected event,” said B. V. Acharya, the special public prosecutor appointed by the government in Karnataka, where the case had been moved. “We normally expect the judgment confirming the lower court order.”