A spokesman for the 3rd Infantry Division said the women had been released into the custody of a local shaikh.
The US military confirmed on Wednesday that it had detained the two women, named by relatives as Salima al-Batawi, 65, and her 35-year-old daughter, Aliya.
The military said they had been detained on suspicion of aiding fighters and added it was investigating accusations they were being held as hostages by troops searching for male relatives suspected of taking part in attacks.
"US forces do not take hostages, nor do we participate in blackmail activities," Lieutenant Colonel Clifford Kent, spokesman for the 3rd Infantry Division, said in a statement on Friday.
"We strongly believed they had both direct and indirect knowledge of the planning and coordination of attacks against Iraqi security forces and coalition forces," Kent said.
"Sources told us the women were present during meetings to plan attacks against coalition forces and that they had knowledge of terror cell leaders and the location of weapons caches in the area."
A handwritten note in Arabic left at the house where the women were detained and seen by Reuters reporters who went to the site read: "Be a man Muhammad Mukhlif and give yourself up and then we will release your sisters. Otherwise they will spend a long time in detention."
It was signed "Bandit 6", apparently US army code, possibly designating a company commander.
Iraqis says arresting women
violates their culture
Al-Batawi's neighbours said US troops accompanied by Iraqi police had arrested al-Batawi's mother and sister and had told residents through an interpreter that the women would be freed once the brothers surrendered.
The US military said it was investigating the accusations. "It is our policy to aggressively investigate any allegation of misconduct by our soldiers," Kent said.
"It is not an indication of anyone's guilt or innocence; it is merely our standard procedures for determining the truth of the situation."
Salima said US troops in 30 Humvee vehicles showed up at their house just north of Baghdad at dawn last Saturday. One of them asked her for the whereabouts of one of her sons.
"I told him I would not give him the information because my three sons had already been detained by the Americans for a year and they were innocent. They said we would be detained until my son surrenders," she said.
"I told the Americans they could shoot me and jail my son if there was evidence of his guilt. I told him to bring whoever was spreading these lies to stand before me and prove it."
Salima said she and her daughter were then blindfolded and handcuffed and driven to a US base.
"I was very surprised. I did not expect the Americans to treat women in this way," Aliya said.
The women said they were treated well at the US base. "They carried out a professional investigation. They treated us with respect. We found beds with clean sheets and copies of the Quran and bottles of water in a big room," Salima said.
Arkan Mukhlif al-Batawi, an Iraqi from Taji just north of Baghdad, said on Tuesday the detained women were his mother and sister. He said they were arrested to pressure him and his brothers, Muhammad and Saddam, to surrender themselves to troops who suspected them of links with fighters.
"I was very surprised. I did not expect the Americans to treat women in this way"
On several occasions, Iraqis have accused US troops of arresting women to pressure fugitive male relatives into giving
Amnesty International says such arrests would be in breach of international law. The US military says it only detains those suspected of crimes or involvement in attacks.
The detention of women enrages many Iraqis, who say it violates their conservative Muslim culture. Sunni clerics had demanded that the two women arrested in Taji be freed.
Al-Batawi, who spoke to reporters at the offices of a leading group of Sunni clerics, said he was not sure why the troops wanted to arrest him and his brothers. He denied any wrongdoing, but said he thought US troops suspected the brothers of involvement in attacks.