The department issued the advisory on Wednesday for all residents to boil water after the presence of fecal coliform bacteria (E. coli) was detected in water samples.
It was lifted at 10 p.m. on Thursday after a second round of tests showed no signs of E.coli.
Restaurants and some other businesses in the area have been closed for days because of the order.
Restaurant managers said the mandate came at a bad time, just before the holiday weekend when they typically see a boom in business.
"It's the Fourth of July weekend and there's a lot of travelers on the road," said Phillip Crawford, who manages Smithfield's Chicken ‘N Bar-B-Q restaurant on North Brightleaf Blvd.
"This is one of the main stops on the travel route for a lot of people because it's right on Interstate 95," Crawford said. "So, we do get a lot of business. It really impacts this store big."
Judy Kaspar and her daughter couldn't believe how empty the parking lot was when they pulled up to their hotel in Smithfield on Thursday and got an explanation from the manager.
“They said that one out of five people are keeping their reservations and four out of five are canceling,” Kaspar said.