Paul Mardirossian, a Swedish citizen and former owner of a string of Stockholm nightclubs, had been held in the United States for almost four years after being arrested in Panama trying to sell weapons to an undercover agent.
In 2012, he pleaded guilty to charges of conspiring to supply weapons to Colombian guerrillas in exchange for cocaine.
He had faced charges including conspiring to engage in narco-terrorism, conspiring to provide material support to a foreign terrorist organization, attempting to provide material support to a foreign terrorist organization, attempting to import five kilogrammes or more of cocaine into the United States, and money laundering. In the United States, some of these crimes can be punished with life prison sentences.
It is understood that Mardirossian undertook a plea bargain last year, reducing the length of his sentence by making concessions to the police.
On Tuesday he was released.
"He was let go early due to good behaviour," Jennifer Queliz at the New York prosecutor's office told Sweden's Expressen newspaper.
She explained that while he had been sentenced to four years in prison, the time he had been detained was subtracted from the sentence.
"Good behaviour and not committing any crimes during dentention are grounds for early release, and that's why this sentence wasn't quite four years," Queliz added.
Mardirossian's current location has been kept a secret, but his family told Expressen that he was on his way home.
His lawyer, Sabrina Shroff, said the Swede was relieved to be freed.
"Four years is no short time. This has been extremely tough for him. I am glad for him and I hope he can reconnect with his family," she said.