Toomaj Salehi was arrested in October 2022 after publicly supporting protests that erupted throughout Iran following the death of Mahsa Amini in police custody.
His death sentence was overturned in June and he was released from prison on Sunday "after serving his sentence" of a year for propaganda against the state, Iran’s judiciary-run Mizan news agency reported.
Mr Salehi, 34, boldly criticised Iran’s leaders in his music and was already banned from performing at concerts prior to his arrest.
He was sentenced to six years and three months in prison in July 2023, after avoiding a death sentence due to a Supreme Court ruling.
Mr Salehi was briefly released on bail before being rearrested days later for sharing "false claims without evidence" - seemingly a reference to a video he posted claiming to have been "tortured" by intelligence ministry agents.
He was sentenced to death in April 2024 for the capital offence of "corruption on earth", though this was later overturned.
The rapper had been charged with a string of offences, including spreading lies in cyberspace, disruption of public order and propaganda against the establishment.
Index on Censorship, a campaign group that had been working to free the rapper, welcomed his release and said Mr Salehi "should never have been imprisoned to begin with".
His arrest came at the height of nationwide protests sparked by Mahsa Amini’s death.
The 22-year-old Iranian Kurdish woman was detained by the religious police while visiting Tehran with her family for allegedly wearing an "improper" hijab.
Hundreds were killed and thousands arrested during the unrest that followed.
About 1,000 people in Tehran have been charged in connection with the anti-government protests that have engulfed Iran, the city's chief prosecutor says.
Suspects accused of "acts of sabotage", including murdering security guards and arson, face open mass trials this week.
Authorities have not said how many have been arrested nationwide, but rights activists have put the total at 14,000.
The announcement came as two teenage protesters allegedly killed by security forces were buried in north-west Iran.
To the south, in the city of Sanandaj, another crowd gathered at the grave of Sarina Saedi, who was also 16.
The BBC's Kasra Naji says witnesses saw her fall to the ground during a protest a few days ago after she was hit by birdshot fired by security forces.
However, our correspondent adds, Sarina's father was forced to announce on TV that her death was the result of a suicide in order to absolve security forces of blame.
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Iran's Human Rights Activists News Agency (HRANA) reports that 284 people, including 45 children, have been killed by security forces in the crackdown on protests, which erupted after the death in police custody of a woman accused of wearing her hijab "improperly".
Authorities have portrayed the protests as "riots" fomented by Iran's foreign enemies and warned that those who take part will face severe punishment.
Iran's judiciary chief, Gholamhossein Mohseni Ejei, vowed on Monday that judges would "deal with the cases of the recent riots with accuracy and speed".
"Those who intend to confront and subvert the regime are dependent on foreigners and will be punished according to legal standards," the Associated Press cited him as saying.
On Saturday, a Revolutionary Court in Tehran began trying five people on charges that carry the death penalty, state news agency Irna reported.
They included one man accused of "corruption on Earth" for allegedly hitting and killing a police officer with his car, it said. Another man who allegedly attacked police with a knife and set a government building on fire faced the charge of "enmity against God", it added.
IRGC commander Maj Gen Hossein Salami warned people to stop protesting on Saturday
The protests have continued despite the threat of prosecution and an ultimatum from the commander of the Islamic Revolution Guard Corps (IRGC), a powerful military force tasked with defending the country's Islamic system.
"Today is the last day of the riots," Maj-Gen Hossein Salami declared in a speech on Saturday. "Do not come to the streets anymore."
Defiant students were filmed protesting at more than a dozen universities across the country the following day.
Video appeared to show armed personnel in plainclothes attacking a crowd with tear gas and sticks at a branch of Azad University in Tehran.
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Security forces also reportedly opened fire at students protesting at Kordestan University in Sanandaj.
The unrest was triggered by the death on 16 September of Mahsa Amini, a 22-year-old woman who fell into a coma after being arrested by morality police in Tehran for allegedly violating Iran's strict rules requiring women to cover their hair with a hijab, or headscarf.
There were reports that officers beat her head with a baton and banged it against the side of a vehicle. The police denied mistreating her and said she suffered a heart attack.
The first protests took place after Ms Amini's funeral, when women ripped off their headscarves in solidarity.
They have since evolved into one of the most serious challenges to the clerical establishment since the 1979 Islamic Revolution.
