The world's largest Baptist university has removed a ban on "homosexual acts" from its sexual conduct policy, although it remains unclear whether it would welcome married gay couples.
Until now, Baylor University, in Waco, Texas was one of a few American colleges and universities where students, and sometimes staff, could be dismissed for homosexuality.
Engaging in homosexual acts was listed on the misconduct rules along with sexual assault, incest, adultery and fornication.
A university official said on Tuesday that homosexual acts were no longer a punishable offence, although adultery and fornication still go against the school's emphasis on marital fidelity.
"These changes were made because we didn't believe the language reflected the university's caring community," Baylor spokeswoman Lori Fogleman told Reuters.
The new policy was endorsed by the university's board in May. It states: "Baylor will be guided by the biblical understanding that human sexuality is a gift from God and that physical sexual intimacy is to be expressed in the context of marital fidelity."
The university, which has about 14,000 undergraduates, did not say if it would allow married same-sex couples among its ranks after the US Supreme Court last month ruled that gay marriage is legal in all 50 states.
Dozens of colleges have provisions that are seen as discriminatory against the lesbian, gay, bisexual and transgender community, ranging from housing bias to blocking the formation of LGBT student groups, gay rights advocates said.
"You can't continue to have a college that is seen as hateful, that is seen as discriminatory toward gay people, regardless of whether that college be Christian or otherwise," said Shane Windmeyer, the executive director of Campus Pride, which promotes LGBT life at universities.
One of the better-known Baylor graduates, basketball player Brittney Griner, is also one of the best known US lesbian athletes. In her autobiography she speaks of the frustration of masking her sexuality while attending the school from 2009 to 2013.
"They are more than happy to benefit from the success of their gay athletes. That is, as long as those gay athletes don't talk about being gay," she wrote in her autobiography In My Skin: My Life on and Off the Basketball Court.
Additional reporting by Reuters.