At the time of her arrest, the army had said she posed unspecified "substantial security risks".
Jarrar is a senior member of the leftist Popular Front for the Liberation of Palestine (PFLP), which Israel considers to be a "terrorist organisation".
The army said today that it had incriminating testimony proving Jarrar had engaged in illegal activities, but noted she was retaining her right to remain silent.
The military court noted, however, that implementation of the decision would be delayed by 72 hours to enable the prosecution to appeal.
"Addameer considers the arrest of Mrs Jarrar to be a political one, and calls for her immediate release," it said in a statement, implying she may be kept in custody despite the release order.
The Ramallah-based Palestinian Prisoners' Club says that 12 of 130 Palestinian MPs are currently in Israeli detention.
The Palestinian parliament has not met since 2007, after elections a year earlier which were won by the Islamist movement Hamas.
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