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Gay rights demonstrators at the St. Patrick’s Day parade along Fifth Avenue in March. Credit Damon Winter/The New York Times
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The organizers of the New York City St. Patrick’s Day parade said on Wednesday that they were lifting a ban on openly gay groups marching under their own banner, bringing to a close more than two decades of bitter protests and controversy that thrust an annual celebration into the national gay rights debate.

The decision is a striking reflection of the evolution of gay rights in the city and in American society, and is a measure of changing attitudes in the hierarchy of the Roman Catholic Church.

Every year, the parade kicks off with a Mass at St. Patrick’s Cathedral, the most prominent Catholic church in the country, and the policy of banning gay groups from marching has long been seen by gay rights advocates as a reflection of the church’s hostility.

In recent months, Catholic officials have tried to emphasize the church’s acceptance of gays and lesbians as individuals, while defending the church’s opposition to same-sex marriage. That rhetorical shift has been embraced by Cardinal Timothy M. Dolan, who will serve as grand marshal for the parade next year.

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The St. Patrick’s Day parade took place this year despite the withdrawal of one of its biggest financial sponsors, Guinness. Credit Damon Winter/The New York Times

“I have no trouble with the decision at all,” Cardinal Dolan said at an evening news conference announcing his appointment as grand marshal. “I think the decision is a wise one.”

The parade organizers’ retreat comes after years of mounting political and corporate pressure, and as many states have legalized same-sex marriage. Soon after taking office in January, Mayor Bill de Blasio, a Democrat, said he would not march as long as gay groups were banned. And since the beer giant Guinness pulled its financial support for the most recent parade, other businesses have threatened to withdraw their support.

The pressure to make a change continued to mount as preparation began for next year’s parade, according to several people involved in the negotiations. The change in policy was first reported on Wednesday by The Irish Voice.

Most notably, the organizers faced pressure from employees of NBCUniversal, which broadcasts the festivities and whose contract expires in 2015, to show that the parade was inclusive. The first group to march in next year’s parade under a gay banner will be OUT@NBCUniversal — a lesbian, gay, bisexual and transgender employee resource group.

On Wednesday morning, the organizers said that the NBC employees would be the only gay group permitted to march in the 2015 parade and that other groups would have to apply for 2016. But on Wednesday night, John L. Lahey, the vice chairman of the parade, said other gay groups could still apply to march in next year’s parade, but warned that space was already tight.

Even before the Declaration of Independence was signed and the Constitution was drafted, the Irish gathered on the streets of New York to honor St. Patrick, the fifth-century missionary who is the patron saint of Ireland and of the Archdiocese of New York.

As the city’s Irish population grew, the parade grew with them. By the 1990s, tens of thousands of marchers and spectators converged every March to transform Fifth Avenue into a sea of green swaying to the plaintive wail of bagpipes.

But cultural divides were tearing the city apart two decades ago, as the gay rights movement, spurred by the AIDS crisis, pushed for greater equality and acceptance.

Thousands of people demonstrated in December 1989 outside St. Patrick’s Cathedral over statements by Cardinal John J. O’Connor on abortion, homosexuality and AIDS.

In 1990, New York’s Irish Lesbian and Gay Organization petitioned to march and was denied.

The next year, Mayor David N. Dinkins believed he had reached a compromise by having a group march with an existing delegation. But some spectators pelted the gay marchers with insults and threw beer cans, two narrowly missing the mayor.

“I knew there would be deep emotions, but I did not anticipate the cowards in the crowd,” Mr. Dinkins, a Democrat, said at the time. In 1992 and 1993, he boycotted the parade.

But the organizers had the firm blessing of the Catholic Church and the backing of the courts.

Cardinal John J. O’Connor, capturing the sentiment at that time, declared that “political correctness” was not worth “one comma in the Apostles’ Creed.”

As the court battles raged, the parade committee found itself overwhelmed with legal fees and almost went bankrupt, an experience that one committee member said only served to harden sentiments.

Other cities that stage St. Patrick’s Day parades, notably Boston, have also found themselves fighting over who is allowed to participate. In 1995, the Supreme Court ruled unanimously in favor of Boston parade organizers who banned gay groups from marching.

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Mayor Bill de Blasio boycotted the Fifth Avenue parade, and instead marched in the St. Pat’s for All parade on March 2. Credit Ruth Fremson/The New York Times

In recent years, tensions have eased a great deal. But even as gays gained wider cultural acceptance, the parade refused to change.

Christine C. Quinn, the former speaker of the City Council and a lesbian who has long fought to have the policy changed, said the ban had been a personal affront.

“To have the parade point a finger and say to me and others, ‘You’re not as good as these other Irish people,’ has been very, very painful,” Ms. Quinn said. “That is now coming to an end.”

For years, organizers said the ban was meant to avoid politicizing the parade. But on Wednesday, they acknowledged that it had had the opposite effect.

“Organizers have diligently worked to keep politics — of any kind — out of the parade in order to preserve it as a single and unified cultural event,” the organizers said in their statement. “Paradoxically, that ended up politicizing the parade.”

Bill O’Reilly, a spokesman for the organizers, said the parade was “remaining loyal to church teachings.”

The change in policy comes at a time when the tone from the Vatican is also changing.

Last summer, Pope Francis signaled a shift in how Catholic leaders talk about homosexuality when he was asked about his views on gay rights. He replied, “If someone is gay and he searches for the Lord and has good will, who am I to judge?”

Still, there were some who condemned the decision to lift the ban and the endorsement of it by Cardinal Dolan, who is the archbishop of New York.

“It is a shameful and sinful capitulation by the parade organizers and Cardinal Dolan,” Pat Archbold wrote in an opinion piece published by the National Catholic Register. “If a parade that is meant to honor a great saint is being used to promote a sinful agenda, it should be canceled rather than allow it to be used in such a way.”

But even some past defenders of the ban seemed willing to accept the change.

William Donohue, president of the Catholic League, said that as long as any group was eligible to march under a banner, and the rules were applied equally, “there should be no controversy.”

Mr. de Blasio greeted the change cautiously. This year, he refused to march, becoming the first mayor in 20 years to boycott the parade.

When asked on Wednesday if the decision to lift the ban meant he would participate, Mr. de Blasio said he needed more details. “It’s a step forward,” he said. “But I need to know more before I can tell you how we’re going to handle something six months from now.”

Sarah Kate Ellis, the president of the gay rights group Glaad, said that two decades of steady pressure had forced the change.

“It’s about time,” Ms. Ellis said. “Discrimination has no place on America’s streets, least of all on Fifth Avenue.”

Irish Queers, a leading advocacy groups for gay and lesbian Irish-Americans, said that lifting the ban was a good first step but that it hoped wider participation would be allowed.

“We welcome this cracking of the veneer of hate, but so far Irish L.G.B.T. groups are still not able to march in our community’s parades,” the group said in a statement. “The fight continues.”

Correction: September 3, 2014

An earlier version of this article misstated when Guinness, one of the biggest sponsors of the parade, withdrew its support. It was in March, not last year.