US officials said Merrill Newman, an 85-year-old from California, arrived in Beijing after being freed.
North Korea deported him "from a humanitarian viewpoint", its official Korean Central News Agency said, citing his "sincere repentance" as well as his age and health condition.
The release came as US Vice President Joe Biden visited South Korea, the last stop on a three-country Asia tour that has already taken him to Japan and China.
"The DPRK (North Korea) today released someone they should never have had in the first place, Mr Newman," Biden said.
"It's a positive thing they've done," Biden said during his trip to the demilitarised zone, which has split the peninsula since the 1950-1953 Korean War.
But he urged Pyongyang to free another US citizen, Kenneth Bae, a 45-year-old tour operator who was arrested a year ago and sentenced to 15 years' hard labour on charges of seeking to topple the government.
Biden said Bae was being held for "no reason" and "should be released immediately".
Newman, who has a heart condition, was plucked off a plane in October as he was leaving Pyongyang following a tourist visit. His family said he was detained on October 26 shortly before take-off from the North Korean capital.
Biden's office confirmed that Newman was in Beijing, and said the vice president had spoken to him by telephone.
"I offered him a ride home on Air Force Two, but as he pointed out, there's a direct flight to San Francisco, so I don't blame him, I'd be on that flight too," Biden told reporters.
Newman told reporters at Beijing airport that he was "very glad to be on my way home", according to the South's Yonhap news agency.
Asked about the first thing he planned to do, the veteran said he would "go home and see my wife", Yonhap said.
"We are pleased that Mr Merrill Newman has been allowed to depart the DPRK and rejoin his family," US State Department deputy spokeswoman Marie Harf said in a statement.
She also called on Pyongyang to release Bae "as a humanitarian gesture so that he too can return home to his family".
South Korea's foreign ministry welcomed Newman's release, and analysts in Seoul said Pyongyang had freed him in a bid to facilitate dialogue with Washington. Biden said he had no direct role in securing his release.
"North Korea knows that the detention of a sick, old man will aggravate relations with the United States," Dongguk University professor Kim Yong-Hyun told AFP.
"His release reflects Pyongyang's intention to facilitate dialogue with Washington," he added.
Last week Pyongyang for the first time officially admitted holding Newman, saying he was detained for "hostile acts" after entering the country "under the guise of a tourist".
North Korea had accused him of committing crimes both as a tourist and during his participation in the Korean War six decades ago.
The North also claimed that Newman masterminded espionage and subversive activities during the war and was involved in the killing of North Korean soldiers and innocent civilians.
Newsman, a retired financial executive who spent time in North Korea during the war, had filmed a video apology confessing to his crimes.
The North released the footage and photos showing Newman - dressed in a button-down blue shirt and light, wrinkled trousers - reading the apology, which was dated November 9 and ran to nearly 600 words.
Pyongyang claimed Newman, who supervised a South Korean guerrilla unit during the war, had intended to meet surviving soldiers and pray for the souls of the dead during his trip to North Korea.
But friends and relatives have said the grandfather, who was on an organised tour, was detained due to a "misunderstanding".
South Korean veterans who served with Newman during the war have said North Korea fabricated charges against the American.
The autocratic regime has in the past freed detained Americans after visits from high-level emissaries.
Pyongyang runs one of the world's most secretive states and independently verifying official reports is notoriously difficult.
The communist regime is widely thought to govern with an iron fist, with frequent public executions and up to 200,000 political prisoners languishing in labour camps.
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