The American Civil Liberties Union, which is representing Rosa Maria Hernandez, had threatened to sue if the government did not release the girl by Tuesday afternoon.
Hernandez was traveling last week for gallbladder surgery at a children's hospital in Corpus Christi, Texas, when immigration agents stopped her medical transport vehicle.
The agents followed her to the hospital, monitored her treatment and detained her once it was completed. She was taken to a government-run shelter for unaccompanied refugee children.
The ACLU's lawsuit demanded that she be immediately released to her parents, instead of being held for possible deportation.
"Hospitals are considered sensitive locations under Homeland Security's own policy, and Border Patrol should not be arresting people there -- especially children," ACLU attorney Michael Tan said in a statement.
"The government's actions are unlawful, cruel, and threaten to keep parents with sick children from seeking care."
US Customs and Border Protection argued that it was obligated by law to detain the girl, because she was undocumented and did not have a parent or legal guardian with her.
"The law specifically defines who is a parent or legal guardian and there is no discretion with regard to the law whether or not the agents should enforce the law," the agency said in a statement.
A US citizen relative was accompanying Hernandez instead of her parents, because they feared being arrested.
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They had illegally immigrated to the United States, settling in the Texas border town of Laredo when Hernandez was three months old, so she could get better medical care.
Hernandez suffers from cerebral palsy, a brain developmental illness that affects body movement and muscle control. Her mother provides her with around-the-clock care, according to the ACLU.
Another agency in charge of caring for unaccompanied refugee children said it could now only release Hernandez into the custody of a "sponsor" who goes through a rigorous application process.
The child's arrest has caused outrage, with some questioning President Donald Trump administration's priorities, amid increasing detentions of undocumented immigrants.
"All of us should be outraged and alarmed that the federal government would chase a 10-year-old girl with cerebral palsy to a hospital," the ACLU's Andre Segura said.
Supporters raised nearly $27,000 on GoFundMe to help with Hernandez's legal costs.
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