Ri Jong-Chol is among eight North Koreans suspected of involvement in the dramatic killing of Kim, the half-brother of the reclusive nation's leader, who was poisoned with a banned nerve agent at Kuala Lumpur International Airport.
Malaysia's attorney general has announced there was insufficient evidence to charge 47-year-old Ri and that he would be deported today.
As he was led out of a police station outside the capital under tight security and handed over to immigration authorities, police chief Khalid Abu Bakar said he regretted the release.
"We are frustrated because of a lack of evidence," he said via text message from Saudi Arabia where he is on a religious pilgrimage.
However, he denied political or diplomatic pressure had been a factor in the release, saying it was purely an investigative issue.
A senior police official who asked not to be named told AFP that Ri had been handed over to immigration authorities in the administrative capital of Putrajaya.
The vehicle carrying Ri, who wore a bullet proof vest, was escorted by a six police-car convoy and motorcycle outriders. Roads were sealed off as the motorcade left the police station where he has been held.
Ri's release came two days after two women -- one Vietnamese and one Indonesian -- were charged with murdering Kim.
Seven other North Koreans are wanted in connection with the killing, including a diplomat and an airline employee who are believed to be in Malaysia.
Ri was arrested days after Kim suffered an agonising death when he was attacked as he waited to board a flight to Macau.
CCTV footage shows two women approaching the heavyset 45-year-old and apparently smearing his face with a cloth.
Police say he suffered a seizure and died less than 20 minutes later. Swabs of the dead man's face revealed traces of VX, a synthetic chemical so deadly that it is classed as a weapon of mass destruction.
Indonesian Siti Aisyah, 25, and Doan Thi Huong, 28, from Vietnam, face the death penalty if found guilty. Both women say they thought they were merely taking part in a prank video.
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