General Muhammad Ahmad al-Batrawi, head of the financial control committee of the national security service, was abducted on Thursday by a group of men who intercepted his car and forced him out of the vehicle.
The took him to a hideaway in the Nusairat refugee camp, security officials said.
Just over three hours after al-Batrawi was seized, he was freed through intervention of Fatah leaders and security commanders and was driven to his home in the nearby town of Dair al-Balah, witnesses said.
It was not immediately known what, if anything, the fighters had demanded or exactly who was behind the kidnapping.
The Gaza Strip was hit by an unprecedented spate of kidnappings two months ago, which led Palestinian Prime Minister Ahmad Quraya to submit his resignation, before later retracting it.
Among those kidnapped in July was the then head of the Palestinian police force, General Ghazi Jabali, who quit shortly after the end of his ordeal which lasted several hours.
General Ghazi Jabali quit his post
after his kidnapping ordeal
However, there has been no sign of an end to the security crisis which has been at the centre of a power struggle between Quraya, veteran Palestinian leader Yasir Arafat and the Palestinian parliament.
The acting head of the Palestinian intelligence services, Tariq Abu Rajab, was also seriously wounded last month when fighters ambushed his convoy and killed two of his bodyguards.
Abu Rajab had been at the helm of the intelligence services since previous incumbent Amin al-Hindi resigned after the July kidnappings.