Akbar Ganji, a journalist, was jailed in 2000 after writing a series of articles linking senior officials to the murder of political dissidents.
Youssef Mowlaie, Ganji's lawyer, said on Saturday: "Mr Ganji's jail term ended last night."
He said Ganji had been allowed to go home for the Iranian New Year holiday, which starts on Monday night.
However, Mahmoud Salarkia, Tehran's deputy prosecutor-general for prison affairs, told the official IRNA news agency that this was not technically the end of the sentence.
He said: "Currently, he is on leave and his sentence will end on March 30."
Mowlaie said there would be some legal arguments about when the jail term ended officially. It was not immediately clear if Ganji would have to return to jail for a few days.
Ganji fell ill in July, weakened by a hunger strike intended to persuade authorities to release him. His case drew criticism from the European Union and America.