Veera Somkwamkid, a former leader of Thailand's "Yellow Shirt" royalist movement, was sentenced to eight years in prison in 2011.
He was freed today and will be allowed to return home, according to Eang Sophalleth, a spokesman for Cambodian Prime Minister Hun Sen.
The imprisonment of Veera, along with his secretary Ratree Pipattanapaibul, strained relations between the neighbouring countries, setting the scene for a series of deadly border clashes the same year.
Veera's amnesty coincided with a visit to Cambodia by Thai foreign ministry permanent secretary Sihasak Phuangketkeow for talks with Hun Sen and other top officials.
The activist will be allowed to return to Thailand tomorrow with the Thai delegation, Eang Sophalleth told reporters.
Veera and Ratree were among seven Thais arrested by Cambodia in late 2010 while inspecting disputed border territory.
The other five -- including a then-ruling party politician -- received suspended sentences.
Thaksin's sister Yingluck Shinawatra was ousted as prime minister in a controversial court ruling in May, and soon afterwards the Thai military seized power in a bloodless coup.
The junta sent Sihasak to Phnom Penh to discuss border security and a recent exodus of Cambodian workers from Thailand, sparked by fears of a crackdown on illegal migrants.
The two countries' border has never been fully demarcated, partly because it is littered with landmines left over from decades of war in Cambodia.
