Mulla Krekar is suspected of being a member of Ansar al-Islam that the US believes is behind repeated attacks on the occupation forces in Iraq. Krekar, however, denies any terror-links.
"I am very happy, I hope that this case will end," Krekar said after his release from an Oslo jail where he had been held since early January.
"They had no evidence against me. I was released," he said.
Krekar, who has had refuge status in Norway since 1991, admits co-founding the Ansar al-Islam group, but says he stepped down as leader in May 2002.
Krekar's lawyer, Brynjar Meling, said his client's release did not mean Norwegian police had dropped their investigation, but the evidence against him was not strong enough to keep him detained.
"Recent new information in the case has weakened the evidence," the lawyer said.
It was the second time in a year Norwegian authorities had jailed and then released Krekar as they investigated him on suspicion of conspiracy, attempted murder of political rivals in Iraq and inciting criminal activity.
Police last year dropped formal terrorism charges against Krekar, who is also fighting an expulsion order from Norway.