The release order of the Jammat-ud-Dawah chief comes fore days before the 26/11 Mumbai attack anniversary.
The Judicial Review Board rejected a request from the government of Pakistan to extend Saeed's detention by three months.
“The government is ordered to release JuD chief Hafiz Saeed if he is not wanted in any other case," PTI quoted the board.
"The government cannot afford to set Saeed free in the current circumstance. It cannot face international backlash in the event of releasing the JuD chief," the official source told PTI.
The government had informed the judicial body that Saeed’s release could lead to imposition of international sanctions on Pakistan.
It also said that the Federal Finance Ministry had "some important evidence" against him to justify detention.
On January 31, Saeed and his four aides including Abdullah Ubaid, Abdul Rehman Abid, Malik Zafar Iqbal and Qazi Kashif Hussain were detained by the Pakistan’s Punjab government for 90 days under the Anti-Terrorism Act 1997 and the Fourth Schedule of Anti-Terrorism Act 1997. Last month, the Judicial Review Board had allowed a 30-day extension to his house arrest. The detention is set to expire in the last week of November.