The justice department in the northern German city of Hamburg said that the decision to release Motassadeq had been made on the basis of a federal court ruling upholding a complaint by the 31-year-old Moroccan.
Motassadeq was originally jailed for 15 years in 2003, convicted of helping the 11 September plotters who were based in Hamburg with logistical support and other aid.
But that verdict was overturned by Germany's Supreme Court in 2004 and a retrial ordered.
The court ruled last August there was no proof that Motassadeq knew about the 11 September plot and jailed him instead for membership of a terrorist organisation. He again appealed.
In the latest ruling, Germany’s federal court said it agreed with a complaint by Motassadeq that the judges in Hamburg had been wrong to order his return to custody pending appeals from both defence and prosecution lawyers.
"The fact that a [not yet final] verdict was issued or that prosecutors have sought a higher sentence does not suffice to cancel the exemption from imprisonment granted earlier," it said in a statement.
The decision to release Motassadeq does not affect his conviction, it said.
The Moroccan student made no comment as he left the Hamburg prison where he had been held since August.
His lawyer Gerhard Strate said he filed the suit demanding Motassadeq's release with the federal constitutional court in the southwestern city of Karlsruhe on the grounds that he had been held in custody during the year-long retrial.
He said that since he had not abused the trust the court placed in him at that time, it would be "capricious" to hold him in custody pending the decision on the appeal.
It was not immediately clear when the decision on whether to grant a retrial would be made.
A Spanish court last September jailed Imad Eddin Barakat Yarkas, alias Abu Dahdah, the Syrian head of an Al-Qaeda cell based in that country, for 27 years for conspiring to commit murder in the attacks in New York and Washington.
Dahdah was jailed for 13 years for complicity in the attacks and 12 for belonging to a terrorist organisation.
"His participation was not proven regarding the execution of the attacks," the judges ruled, but the verdict indicated that he was linked to "Al-Qaeda's macabre designs."
Spain's High Court also jailed 17 other people, including a reporter for the Al-Jazeera television station, for between six and 11 years.