The leader of the Oromo Federalist Congress, Professor Merera Gudina, was released on Wednesday morning and allowed to go home, where he was welcomed by thousands of people.
He has been in prison since December 2016 and was facing charges, including association with terrorist groups.
The Ethiopian regime announced on Monday that it would drop charges against more than 500 suspects.
Human rights groups have long accused Ethiopia of refusing to allow opposition groups to operate freely.
Prof. Merera was arrested in November 2016 at the airport in the capital, Addis Ababa, after he flew in from Brussels.
He had violated Ethiopia’s state of emergency by having contact with “terrorist” and “anti-peace” groups, state-linked media reported at the time.
That month, Mr Merera had criticised the state of emergency in an address to the European parliament.
The government imposed it in October 2016 to end an unprecedented wave of protests against its 25-year rule.