The judge ruled that 33-year-old Mesale Tolu, who was initially detained in late April, would be released along with other five remaining detainees in the case, the Law Office of the Oppressed, which is representing her, announced on Twitter.
The ruling came after a prosecutor in her trial at the start of today's hearing had requested that Tolu and the five others be set free.
Tolu is charged with membership of the Marxist-Leninist Communist Party (MLKP) which is banned in Turkey as a terror group.
Tolu will have to report to the authorities every week and cannot leave the country.
"We welcome this with joy and relief, even if the proceedings against her are not over," said German foreign ministry spokeswoman Maria Adebahr. "It's a first step."
Her case was one of many thorny issues that stoked tensions between NATO allies Turkey and Germany over recent months.
German Chancellor Angela Merkel's spokesman Steffen Seibert said it marked "in no way an end to the case of Mesale Tolu".
Tolu, who worked as a reporter and translator for the leftwing ETHA news agency, told the Istanbul court that she was detained as part a crackdown on freedom of press in Turkey.
"A fair verdict to be delivered by the judiciary will ease the conscience of the public opinion," she said at the hearing.
Tolu is one of several German nationals detained under the state of emergency laws imposed in Turkey after the failed coup attempt last year, in a crackdown Berlin has criticised as excessive.
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