The Little Ducklings nursery in Harmsworth Crescent, Brighton, was told it “required improvement” last year.
Ofsted inspectors reported staff did not know how to protect children from extremism.
Workers were told they had to learn how to spot when youngsters may be at risk of being radicalised by family members or others.
Government inspectors at the time felt staff needed to brush up on their “safeguarding” skills.
But after a recent inspection, Ofsted has raised the nursery’s status to “good”.