The mobile phone retailer's horror-themed ad received more than 500 complaints – the most about an advert in 2011 – from irate viewers, who complained to the advertising regulator.
But the Advertising Standards Authority (ASA) ruled the ads were unlikely to cause serious or widespread offence.
The creative featured a little girl terrifying a woman by appearing and disappearing in an underground car park. It caused a public outcry from people who believed it was "unduly distressing and inappropriately scheduled".
The £5.2m ad campaign, which launched in October and was created by Adam & Eve, resulted in 526 complaints to the advertising watchdog.
The ASA accepted the creative was designed to draw attention to the retailer's "missing our deals will haunt you" strapline by parodying a horror movie.
It ruled the campaign was unlikely to cause serious or widespread offence, because the content and tone of the message delivered by the girl alleviated the tension and the woman in the ad did not appear frightened, once the little girl had spoken.
Caspar Nelson, Phones4U head of brand communications, said: "We see the ASA's ruling as an absolute triumph of creative and impactful advertising. The campaign has been extremely well received by a large audience who recognise the classic horror themes, get the Phones4U sense of humour, and understand what our ads are trying to communicate."
The retailer argued that 526 complaints was a reasonably small number, considering it estimated that 92% of 16- to 34-year-olds across the country had seen the ads an average of 15 times.
The ASA accepted the horror movie theme had distressed some children who had seen it, but ruled the ad was appropriately scheduled because it was broadcast during programmes that did not appeal to children.
Nelson said: "We've sought guidance from Clearcast throughout the campaign, and complied with all its recommendations regarding the appropriate scheduling of content targeted at young adults."
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