Dyab Abu Jahjah, head of the Arabic European League (AEL), was detained after riots swept through Antwerp last week.
The unrest followed the murder of Moroccan immigrant teacher, Mohammed Achrak, who was shot dead by a Belgian man.
The riots left a trail of damage in the Borgerhout area of the city, where many immigrant families live.
More than 100 youths, most of them of North African descent, were detained.
Many in the immigrant community believe Mr Achrak's death was racially motivated, although prosecutors have said there is no evidence of this.
They are holding a 66-year-old man they describe as "mentally unstable".
Lebanese-born Mr Abu Jahjah, 31, was charged with offences including conspiracy, obstruction of traffic, assaulting a police officer and wilful resistance - all charges he denies.
A court in Antwerp ordered him to be freed on condition that he avoided demonstrations and other public gatherings for the next three months.
The decision to free him was not contested by the public prosecutor's office, and was welcomed by his defence team.
"It is a balanced decision," said lawyer Michael Verstraeten. "The chamber ruled there were no grounds" for his detention.
The group's activities have included organising Palestinian support rallies. It is also believed to have carried out video surveillance of Belgian police, looking for evidence to back up its claims of police racism.
Thousands of people attended a memorial service for the murdered teacher.
Racial tensions have been running high in Antwerp since the murder.
The authorities have said they will adopt "zero tolerance" policies to avoid any repeat of the riots.
Mixed city
The city of nearly half a million has a population of some 30,000 people of North African origin.
It is also home to the far-right Vlaams Bloc party, which holds 20 seats on the 55-seat local council.
Belgian Prime Minister Guy Verhofstadt said last week that he would clamp down on the AEL, and a ban could follow. He accused the group of trying to set up no-go areas for the police.
The AEL's stated aims include the adoption of Arabic as an official Belgium language. It has argued against the integration of immigrants into Belgian society.
The AEL is suing the city's mayor, Leona Detiege, for libel, after she accused the group of fomenting the riots on Tuesday and Wednesday, after the death of the teacher.