Cesare Battisti "was freed and has already returned to Sao Paulo," Marcio Palma, a lawyer with the Bottini and Tamasauskas law firm told AFP.
Battisti, who has been on the run for more than three decades but living freely in Brazil since 2010, was stopped by police at the country's western border on Wednesday. On Friday, a judge ordered his release.
Brazilian police said they stopped Battisti, 62, because he failed to declare he was carrying about $6,000 and 1,300 euros.
Battisti says he planned to go shopping in Bolivia. However, the judge ordering his detention said the Italian appeared "to be attempting to flee from the national territory out of fear that he will be extradited" to Italy.
Battisti was convicted of being a member of an armed gang in his homeland in 1979, then escaped from prison near Rome in 1981. He was subsequently convicted for his part in four murders blamed on an armed Marxist group active in Italy in the 1970s.
He spent more than three decades on the run in Mexico and France, where he developed a successful career as a thriller author. He fled to Brazil in 2004, living in hiding before being arrested in Rio de Janeiro in 2007.
Brazil's Supreme Court authorized his extradition in 2009, but this was blocked in 2010 by then leftist president Luiz Inacio Lula da Silva on his last day in office -- infuriating Italy.
Brazil's center-right government, which came to power last year after the impeachment of Lula's hand-picked successor Dilma Rousseff, indicates it will now at least consider his extradition.
After Battisti's detention this week, Italian Foreign Minister Angelino Alfano tweeted that he was working with Rome's ambassador in Brazil to "bring Battisti back to Italy and hand him over to justice."
In Brasilia, a source in President Michel Temer's office said Temer was "waiting for the positions of the justice ministry and foreign relations ministry in order to take a decision."