Egyptian-born Mamduh Habib, 48, had been held at Guantanamo Bay in Cuba since May 2002 on suspicion of working with al-Qaida in Pakistan and having prior knowledge of the 11 September 2001 attacks on the United States.
Pentagon officials announced this month that he would be released without charge. Habib landed in Sydney at about 3:30pm (04:30GMT) on a chartered jet and spent about 30 minutes having his documentation processed by immigration officials on board the plane.
After the formalities were completed, he made a brief walk across the tarmac to a light plane that took off for an undisclosed location.
"He is not in custody, he is at liberty and the exact whereabouts are really a matter for him and his family," Attorney General Philip Ruddock said on Friday after Habib arrived at the Sydney airport.
"He has been reunited with his family," Ruddock said on commercial radio.