The JuD is believed to be the front organisation for the banned Lashkar-e-Taiba (LeT) which is responsible for carrying out the Mumbai attack.
A Judicial Review Board of Pakistan's Punjab province on Wednesday had issued orders to release Saeed, who had been under house arrest since January this year.
He said the government's lawyers had repeatedly argued in court that Saeed was a threat to public safety and that his release could lead to worldwide penalties for Pakistan for not moving against terrorism financing.
Saeed and his four aides - Abdullah Ubaid, Malik Zafar Iqbal Shahbaz, Abdur Rehman and Qazi Kashif Hussain - had been under house arrest since January under the Anti-Terrorism Act.
In a video message after the court decision, Saeed claimed that he was detained because of his associations with the disputed Kashmir region.
"Although there are only few days left in this year but we will continue our struggle in the next year and mobilize people and take forward our movement to free Kashmir", Saeed said to the supporters. Seeking an end to his detention, Saeed argued that his captivity without any legality amounted to a violation of the Constitution and his human rights.
U.S. President Donald Trump in August accused Pakistan of harboring "agents of chaos," and Secretary of State Rex Tillerson said last month that the Washington has made "very specific" requests of Pakistan over militancy.
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Challenging India's disagreement over releasing him, Hafiz Saeed said that India did everything to keep him under arrest but all the efforts are in vain. The judicial board rejected Pakistan government's plea asking to extend the period of confinement by three months.
The fire-brand cleric's release after midnight came ahead of the 9th anniversary of the 26/11 Mumbai attacks in which 166 people were killed.
A Pakistani court this week ordered the release of Hafiz Muhammad Saeed, 67, co-founder and leader of internationally designated terrorist organizations Lashkar-e-Taiba and Jama'at-ud-Da'wah. The JuD head was released after the government decided not to detain him in any further case, Saeed carries a $10 million American bounty for his role in terror activities.
The move outraged Indian authorities, but Saeed's spokesman Yahya Mujahid confirmed his release, calling it a "victory of truth".
Responding to a question, the State Department was quick to express its displeasure over the potential release of Saeed from house arrest.
India has said it has evidence that Saeed was involved in the Mumbai attack, but Islamabad has long said sufficient evidence is not available to charge him.
"I was in custody for 10 months only to stop my voice for Kashmir", Saeed, who has been branded as an worldwide terrorist by the United Nations and the U.S., said his followers.