Pyongyang's official Korean Central News Agency said that Hyeon Soo Lim was released on "sick bail" following a decision by the country's Central Court.
The agency did not provide further details.
Mr Lim was convicted and sentenced in 2015 on charges of trying to use religion to destroy the North Korean system and helping US and South Korean authorities lure and abduct North Korean citizens.
Mr Lim's release comes two months after the death of US Christian student Otto Warmbier (pictured below) shortly after he was released from North Korea in a coma.
South Korea, the US and others often accuse North Korea of using foreign detainees to gain diplomatic concessions, and foreigners have said after their release that their declarations of guilt had been coerced while in North Korean custody.
The office of Canadian Prime Minister Justin Trudeau earlier said that a delegation led by his national security adviser, Daniel Jean, arrived in Pyongyang on Tuesday to discuss Mr Lim's imprisonment.
Mr Trudeau's spokesman Cameron Ahmad said the government considered Mr Lim's health of "utmost importance" but did not give more details about the delegation.
Mr Lim pastored the Light Korean Presbyterian Church in Toronto.
His supporters have said he was on a humanitarian mission to North Korea when he was detained.
Canada does not have diplomatic offices in Pyongyang and relies on Sweden to handle consular issues.
Mr Lim met with the Swedish ambassador at least twice this year and met Canadian officials in December.
At least three Americans and six South Koreans remain in custody in the North.