Cano left Wednesday night's game in the fifth inning when a pitch from Kansas City's Nate Adcock knocked his helmet off his head and sent him sprawling in the dirt.
The second baseman went for a CT scan Wednesday night, then saw more doctors, including a neurologist who gave him the final clearance to play hours before Thursday night's game.
"I knew right away that I was OK," Cano said Thursday before the game. "Never felt dizzy or anything like that. I was good the whole time, but they didn't want to take a chance. ... I'm ready to play tonight."
Manager Joe Girardi put Cano, whose .292 batting average leads New York's regulars, in his usual fifth spot in the batting order. Cano was actually in the lineup before arriving at the ballpark, though Girardi was ready to take him out if Cano wasn't cleared.
Cano said he didn't know whether he would have to wear a larger batting helmet, like the one teammate Francisco Cervelli has worn after sustaining a concussion.
If the decision is up to him, Cano said he would prefer not to. He batted in the second inning wearing what appeared to be a normal helmet.
"I don't want to look like Cervelli!" he said before the game with a laugh. Then he added more seriously: "That thing feels too heavy."
Some players have been reluctant to wear the larger helmet, citing both the look and its functionality, especially while running bases. Others have grown accustomed to it.
"You never know," Cano said. "There could be a lot of hits in it."
He found the homer off Sean O'Sullivan in the fifth inning, a line drive solo shot to right field that was the Yankees' first hit off the righty.
Earlier, Cano made a throwing error on a play to second base, pulling shortstop Eduardo Nunez off the bag in the Royals' six-run second inning.
It was prematurely reported earlier Thursday that Cano would sit out that night.
Information from ESPNNewYork.com's Andrew Marchand, Kieran Darcy and Ian Begley and The Associated Press contributed to this report.