Ibrahim Halawa's release, announced by Irish lawyer Darragh Mackin, came about a month after an Egyptian court acquitted him of charges including murder, arson and illegal possession of weapons.
Halawa was tried along with nearly 500 defendants who received sentences up to life in prison in a mass trial that was slammed by rights groups as unfair.
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Also, Maya Foa, director of the UK-based rights organisation Reprieve, said Halawa's release was "long overdue" and urged the Egyptian government to halt mass trials.
Irish officials welcomed the news as well, saying the government is working on returning the 21-year old Halawa to Ireland. He is from Dublin.
"We are helping him to get back to Ireland to be reunited with his family and get on with his life and his studies," Irish Prime Minister Leo Varadkar said. "He's receiving full consular assistance at the moment."
Irish Foreign Affairs Minister Simon Coveney said "all appropriate ongoing support that Ibrahim requires in the period ahead will be available to him."
Halawa was arrested at the age of 17, along with his three sisters, in August 2013. He is the son of a senior member of the Muslim Brotherhood, an Islamist group that swept to power in elections after the 2011 uprising but is now outlawed as a terrorist organisation in Egypt.
His arrest took place days after security forces violently broke up a sit-in by supporters of Islamist President Mohammed Morsi, who hailed from the Brotherhood and had been overthrown by the military the previous month after mass protests against his divisive, one-year rule.
Halawa's sisters were freed later in 2013, after which they left Egypt. They have been campaigning for his release since.
Following Morsi's ouster, Egyptian authorities launched a severe crackdown on Brotherhood members and supporters, arresting thousands of Islamists, as well as a number of secular and liberal activists.
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