Sina Weibo has around 400 million active monthly users and the backlash caused Nasdaq shares in the company to fall, prompting it to reverse its decision.
Weibo, the Chinese equivalent of Twitter, had said on Friday that it meant to keep the site clear of postings containing homosexual content.
Sina Weibo is a publicly traded company that depends in large measure on advertising and marketing for revenue. Numerous dissenting posts complaining about the ban were themselves blocked by Weibo.
It said: "The clean-up is no longer targeted at homosexual content, and is mainly to clean up the subjects related to pornography and violence".
The official Sina Weibo account states that the new guidelines were implemented to "fulfill corporate responsibility" and to "create a bright and harmonious community environment".
Weibo's censorship of homosexual content rallied netizens behind #IAmGay rally, which garnered 130 million views.
Hua Zile, the founder of "Voice for China LGBT", Weibo's first LGBT-themed account, said he was encouraged by the outrage against the site's censorship plan.
'We must pressure these companies and show them it's not easy to discriminate against an entire community - no matter who orders them to do it'.
The microblogging platform announced new censorship rules to tackle content "with pornographic implications, promoting bloody violence, or related to homosexuality" on Friday.
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The move sparked online outcry where Weibo users protest with the hashtag "I am gay", which was used 170,000 times before Weibo ultimately banned it.
The hashtag "I am gay" was viewed almost 300 million times on Weibo before being censored on Saturday.
The site attempted to crack down on the protest by deleting posts and censoring words such as "gay".
Some sought refuge on Twitter, where they expressed their displeasure. And few minutes later, they delete them, our articles, our statement, disappear in few minutes.
Despite China decriminalising homosexuality in 1997, and homosexuality being removed from the government's list of Mental Disorders in 2001, there is still a lot of controversy surrounding same-sex relationships in the country.
The fight against Sina's decision saw LGBT groups, advocates and gay Chinese go online en masse to speak out.
Gay conversion therapy is still fairly common with many stories of people being forced into facilities for "treatments" aimed at changing an individual's sexual orientation.
Just last week the site's owners revealed it would be banning all content - including photos and videos - that were "related to homosexuality". Hundreds of people participated in a pride run event in Nanjing on Saturday (April 14), a day after Weibo's announcement of the ban-a public display of activism that is becoming nearly extinct in China. Still, some said the company owed gays an apology.