Gu Yuese has been put under residential surveillance meaning authorities are watching his every move.
It's claimed his release was linked to the President's visit to the United States for a nuclear security summit.
Pastor Gu, who is also known as Joseph Gu is the senior pastor of the state-sanctioned Chongyi Church in Zhejiang Province, which is reported to be one of the largest registered churches in China.
He was detained back in January and formally arrested in February on charges of embezzling funds. Supporters claim his arrest was linked to his campaigning against a campaign to remove public crosses from church buildings.
In a separate, development anti-persecution group Christian Solidarity Worldwide is reporting Chinese rights lawyer Ni Yulan was prevented from travelling to the US to receive the US State Department's International Women of Courage Award.
Ni, a Christian lawyer specialising in housing rights who was previously imprisoned and tortured, was due to attend the award ceremony in Washington, DC on 29 March.
However, according to the charity, her request for a new passport was denied, apparently because of her connection with lawyers detained in the 'July 9 crackdown', in which over 300 lawyers, activists, family members and associates have so far been interrogated, detained, imprisoned and disappeared.
Mervyn Thomas, Chief Executive of CSW, said, "We welcome news of Pastor Gu's release but note with concern that he is not actually free as he is under residential surveillance.
"We are also deeply concerned about reports that lawyer Ni Yulan has been prevented from travelling to the US and has been forcibly evicted from her home.
"We congratulate Ms Ni on receiving this award, in recognition of her tireless and courageous efforts to defend the rights of petitioners and other citizens in China. CSW calls on the Chinese authorities to grant Ni Yulan a passport, to cease all harassment and intimidation of Ni and her husband, and to uphold the right of lawyers in China to practice their profession without interference.
"We also urge China to remove restrictions on Pastor Gu and to guarantee the right to freedom of religion or belief for Christians and other religious communities in China."