The case triggered an international outcry and has been cited by government critics as evidence that Cairo is rescinding freedoms gained after a 2011 uprising toppled autocrat Hosni Mubarak, allegations the government denies.
Mohamed Fahmy, a naturalized Canadian who gave up his Egyptian citizenship, was released on bail of 250,000 Egyptian pounds ($32,765). Baher Mohamed, who has only Egyptian citizenship, was released without bail. Judge Hassan Farid said the next hearing in their case would be on Feb. 23.
A third Al Jazeera reporter sentenced with them, Australian Peter Greste, was freed on Feb. 1 and deported.
The three were sentenced to between seven and 10 years on charges including spreading lies to help a terrorist organization — a reference to the Muslim Brotherhood.
The court’s decision comes ahead of an investment conference in Sharm al-Sheikh scheduled for March, which authorities hope will help improve Egypt’s image, which has been damaged by one of the fiercest security crackdowns in its modern history.
President Abdel Fattah al-Sisi’s human rights record has come under scrutiny since he, as army chief, toppled Islamist president Mohamed Mursi in 2013 after mass protests against his rule. He says Egypt faces a tough, prolonged campaign against violent insurrectionists.
Sisi has said that he wished the journalists had been deported and not put on trial.
The courtroom erupted in applause after the judge read his decision.
Fahmy’s fiancee, Marwa Omara, weeping and hugging journalists in the courtroom, said: “Thank you Egypt for doing the right thing … I am happy. For the last year I haven’t been able to sleep.”
Mohamed said on his Twitter account, @Bahrooz: “I AM FREE”
The ruling specified that neither man could leave the country while the case was ongoing.
A lawyer on Fahmy’s team who declined to be identified said the court’s decision to release two journalists “was an indication that the court is going to acquit them.”
Egyptian authorities accuse Qatar-based Al Jazeera of being a mouthpiece of the Muslim Brotherhood — the movement Sisi removed from power in 2013. Al Jazeera denies the allegations.
The network said the pair’s release on bail was a “small step in the right direction” and called for their definitive release.