The court ordered a retrial to begin on 7 January.
Dr Ibrahim was sentenced to jail in July for tarnishing Egypt's image, accepting foreign money without government approval and embezzling funds.
He was also accused of spreading misinformation about the political situation in Egypt.
"I'm happy I'm free," he told French news agency AFP.
"I did not expect things to go so fast; I thank Egyptian justice."
Decision welcomed
The case strained relations with Washington, which threatened to cut aid to Egypt after the verdict.
However US Ambassador to Egypt David Welch has said he welcomed the news that Dr Ibrahim was free, adding the decision was particularly fortunate given Dr Ibrahim's ill health.
The human rights organisation Amnesty International had also called for the release of the 64-year-old sociology professor, who is said to be suffering health problems.
Christians' rights
Dr Ibrahim's conviction was itself the result of an earlier retrial.
It followed an original conviction in May 2001 which led to him serving eight months in prison.
The charges on which Dr Ibrahim was convicted in July this year include:
A report by Dr Ibrahim which traced persecution of Christians back to 1952, and argued that it had intensified under the late President Anwar Sadat, was quoted in court.
The sociologist had allegedly asked a German Protestant organisation to fund a project on Christians and the educational system.
A 1992 military decree bars Egyptians from accepting foreign money without government permission.
Outrage
Ahead of Tuesday's court decision, Amnesty International demanded the release of Dr Ibrahim and three of his colleagues:
"The charges... are a pretext to punish them for criticising government policies," the organisation said.
Dr Ibrahim's colleagues at the Cairo-based Ibn Khaldun Centre for Development Studies, which was founded by the academic, were sentenced to three-year prison terms.
Their arrests came in July 2000 after the centre announced it intended to monitor that year's parliamentary election in Egypt.
The centre's report on the 1995 election had alleged vote-rigging.
Following the sentence this summer, US President George W Bush announced his country would oppose granting Egypt any aid beyond the $2bn it supplies as part of the Israeli-Egyptian peace treaty.
The jailed professor, who is originally from Illinois, is still recovering from a broken leg and also suffers from a neurological disorder.