The 107-centimetre by 77-centimetre oil-on-wood work, known in Italian as the Madonna del Cardellino, portrays Jesus Christ's mother Mary with two children caressing a goldfinch.
The children symbolize a young Christ and John the Baptist while the bird, feeding among thorns, is interpreted as representing Christ's future suffering.
The restored painting has been transformed from its faded and dour colours, more green and brown, to its original glory — a vivid blue sky and an equally bright blue dress on the Madonna.
Meticulous restoration has removed centuries of film and grime.
Raphael, who died in 1520, painted the panel as a gift for the wedding of Lorenzo Nasi, a wool merchant.
The work was broken into 17 pieces when the Nasi house collapsed in 1547. Another artist used nails to put it together again and also repainted the piece to conceal the breaks.
It later became part of the collection of Florence's powerful Medici family, who also commissioned several repairs to the painting.
"I think I probably know this painting almost better than Raphael," chief restorer Patrizia Riitano said.