Afsaneh Norouzi was sentenced to death three years ago and has been in jail since 1997. The mother of three said she stabbed the man when he tried to assault her on the resort island of Kish in the Gulf.
Iran's police in December concluded that Norouzi, in her early thirties, had killed the officer in self-defence.
But Norouzi still has to pay blood-money to the officer's family. Women's groups and newspapers in Iran and the United States have rallied to raise the money.
Iranian newspapers put the blood-money at 50 million tomans ($57,000).
"She was just released and is with me in the car," Norouzi's lawyer, Abdolsamad Khorramshahi, told Reuters by telephone on Wednesday.
"She was just released and is with me in the car"
Norouzi's death sentence was upheld after appeal in 2003, but Judiciary chief Ayat Allah Mahmoud Hashemi-Shahroudi ordered a fresh investigation into the case, a day before the sentence was to be carried out.
Iran's Supreme Court revoked the death sentence against Norouzi last July, sending the case back to a lower court in Kish.
Iranian rights activists launched a campaign to save Norouzi's life arguing her execution would make women afraid to defend themselves against sexual assaults.