The 42-year-old man, from Beckenham, was arrested on suspicion of manslaughter after the tram flipped on its side in Croydon during the morning rush hour on Wednesday.
He was bailed until May while the investigation continues, British Transport Police (BTP) said.
Investigators said the tram was travelling at a "significantly higher speed than is permitted" and are probing whether the driver had fallen asleep.
More than 50 people were injured when the vehicle left the track.
Dane Chinnery, 19, a football fan described as a "friendly, genuine lad", was among those killed.
Tom Dale, 20, was on the tram and said he recalled nodding over to his old school friend Chinnery, who was already sitting on the tram when he boarded.
Dale said after the tram crashed he was looking for his friend, and asking, "Where's Dane? Where's Dane?", but all he could see was Chinnery's boot where he had been sitting.
"It was like walking out of a war zone," the chef said.
Dale, who was badly bruised, said of Chinnery: "He was just a friendly, genuine lad, did no harm to nobody, really. No one deserves for this to happen to them."
London mayor Sadiq Khan, who visited the scene, warned the death toll could increase.
BTP said forensics teams are expected to stay at the crash site until Thursday evening at the earliest, and identifying the dead may be a "complex and lengthy process".
The tram was travelling from New Addington to Wimbledon via Croydon when the accident happened.
Scenes after the crash were described as "total carnage" after the two-carriage tram tipped over in heavy rain next to an underpass.
The driver was arrested on suspicion of manslaughter and taken into custody for questioning.
The crash is being probed by BTP and the Rail Accident Investigation Branch (RAIB).
BTP Assistant Chief Constable Robin Smith said officers were also investigating "a number of factors".
