Philippine truck driver Angelo de la Cruz has been freed from captivity in Iraq after Manila complied with a demand to withdraw troops from Iraq.
De la Cruz has been handed to the Philippine embassy in Baghdad
Militants took Mr de la Cruz captive on 7 July, and threatened to behead him unless their demand was met.
President Gloria Arroyo has risked her strong ties with Washington by withdrawing the tiny Philippine contingent a month early.
Her decision has drawn sharp criticism from the US and its allies.
Mr de la Cruz was handed to the Philippine embassy in Baghdad on Tuesday, after being dropped off outside the United Arab Emirates mission in the Iraqi capital.
"I am fine and relaxed. I am extremely happy and I can't say anything more than this," Mr de la Cruz told French news agency AFP.
Mr de la Cruz was held by a group which called itself Islamic Army, Khaled bin al-Waleed corps.
A purported statement from a group led by Abu Musab al-Zarqawi, a militant with suspected ties to al-Qaeda, has disowned a threat against Japan that was posted in Mr Zarqawi's name on a website earlier on Tuesday.
"To correct the mistake, we want to clarify to Muslims and the mujahideen that the statement attributed to the group has caused us surprise and astonishment," said the statement, purported to come from the Jamaat al-Tawhid and Jihad group.
The earlier statement, also in the name of the group, had demanded that Japan pull its 500 troops out of Iraq or face attacks.
Mrs Arroyo has defended her decision to withdraw the 51-strong Philippine contingent a month ahead of schedule.
"I made a decision to bring our troops home a few days early in order to spare the life of Angelo," Mrs Arroyo said. "I do not regret that decision. Every life is important."
Mr de la Cruz's family has been anxiously gathered around the television in the village of Buena Vista, north of Manila.
"I am very, very happy. His health is okay... His family is waiting for him," said Mr de la Cruz's wife, Arcenya.
White House spokesman Scott McClellan called the troop withdrawal "disappointing" and has said it sent "the wrong signal to terrorists".
COALITION TROOPS IN IRAQ
US - 112,000
UK - 8,300
Italy - 2,800
Poland - 2,350
Ukraine - 1,550
Netherlands - 1,300
Australia - 850
Romania - 700
South Korea - 700
Japan - 500
US Deputy Secretary of State Richard Armitage said it would not affect relations with the Philippines, but a US official speaking on condition of anonymity told AP news agency that Washington was reviewing ties with Manila.
"It's a new situation," the official was quoted as saying. "We have to re-evaluate our overall relationship."
Bulgaria has said it will keep its 470 troops in Iraq despite the beheading of a civilian truck driver taken hostage in the north.
There has been no news on the fate of his colleague after a deadline set by his kidnappers for the release of Iraqi prisoners passed last week.