How to remove .htaccess password protection from a subdirectory

Adding to RageZ's answer, I used this in the Server Directives:

<Directory /var/www/protected/>
     AuthType Basic
     AuthName "Production"
     AuthUserFile /path/to/.htpasswd
     Require valid-user
</Directory>

<Directory /var/www/protected/unprotected>
     Satisfy Any
</Directory>

Awesome. Thanks RageZ!

You need to create a new .htaccess file in the required directory and include the Satisfy any directive in it like so, for up to Apache 2.3:

# allows any user to see this directory
Satisfy Any

The syntax changed in Apache 2.4, this has the same effect:

Require all granted