Sgrena, 56, was kidnapped by armed men near Baghdad University where she had been interviewing refugees from last year's US assault on Falluja.
Il Manifesto's editorial director Francesco Paterno said he had been informed of Sgrena's release by an Italian official in charge of the secret service.
"It's been confirmed. Gianni Letta confirmed it. They have her," said Paterno, without giving any further details.
Italy's President Carlo Azeglio Ciampi also confirmed that Sgrena had been released.
"I'm very moved and happy. The release of Giuliana Sgrena has
given us women the most beautiful present for 8 March," said Deputy Foreign Minister Margherita Boniver earlier, referring to International Women's Day next Tuesday.
Staff at her newspaper erupted into "applause, joy and tears," at the news, a journalist at the newspaper said.
"It's an exceptional day," said her father Franco Sgrena, who
"It's an exceptional day"
father of Giuliana
was reported by the ANSA news agency to be receiving treatment from a doctor because he was overcome with emotion.
Vatican sources said Pope John Paul II, who had addressed an appeal to her kidnappers to release Sgrena and all other captives held in Iraq, "expressed his satisfaction," at the news.
Il Manifesto strongly opposed the US-led invasion of Iraq and has fiercely criticised Prime Minister Silvio Berlusconi's support and his decision to deploy 3000 troops in Iraq.
Sgrena reported from Baghdad during the bombardment of the city in March 2003 (for which she was awarded the title of merit Cavaliere del Lavoro by Italy's president) and returned many times to describe the daily lives of Iraqis under living occupation.