Abdul Rahman, 41, thought to be under United Nations protection, has now asked for asylum after Islamic clerics and protesters demanded his death.
He was jailed this month for abandoning his faith, and judicial officials said he could face trial under Islamic sharia law that stipulates death as punishment for apostasy.
But he was released following a chorus of pleas that his religious freedom be respected from the West, including a letter from Pope Benedict to Afghan President Hamid Karzai.
"I can confirm that he was released," Afghan Justice Minister Sarwar Danish said on Tuesday.
"He is not in detention. I do not know if he is with his family or where, but he has been acquitted."
He said authorities had to order Mr Rahman's release as there were problems with the case presented against him in court, and due to doubts over his mental capacity to stand trial.
UN officials are meeting in Afghanistan's capital Kabul to discuss possible asylum, and a spokesman said he expects this wish to be granted by a country "interested in a peaceful solution".
Earlier a senior judicial official said that Rahman had been moved from Kabul's main prison to a medical facility but was still in the custody of judicial authorities and would undergo psychiatric tests.
Afghanistan's Western-backed government has been seeking a face-saving way out of the crisis, satisfying Western pleas for the man's freedom while appeasing conservative clerics at home who have been demanding Rahman be punished under Islamic law.
Rahman became a Christian while working for an aid group helping Afghan refugees in Pakistan 15 years ago, and later lived in Germany before returning to Afghanistan in 2002.
He was detained about two weeks ago after his relatives told authorities he had converted to Christianity following a dispute involving two daughters, officials said.
The release is almost certain to spark protests, with one report that a Taliban council has issued a fatwa against him.