Israel has freed 25 Egyptian prisoners in another exchange deal to secure the release of a dual American-Israeli citizen accused by Egypt of being a spy.
Ilan Grapel, 27, a student from New York, was arrested in Cairo in June while he was working as a volunteer at an aid organisation.
The ABC reports the Egyptian military accused him of being an Israeli spy and actively trying to stir up the ongoing uprising against Egyptian authorities.
He was accused of planning attacks on police stations in Egypt.
The student and his family, along with Israel and the United States, denied he was a spy and demanded his release.
Even many Egyptians were sceptical that he was an Israeli spy, especially as he travelled to Egypt under his own name and even posted photographs of himself in an Israeli military uniform onto his Facebook page.
After four months of negotiations, he has now been released and flown back to Israel in exchange for 25 Egyptians - mostly drug and weapons smugglers or illegal immigrants - who were in Israeli jails.
Mr Grapel's mother, Irene, told CBS News that the accusations against her son were ridiculous.
"He certainly had nothing to do with fomenting the revolution against Mubarak, fire-bombing police stations," she said.
The ABC reports Mr Grapel's release came soon after an Israeli soldier, Gilad Shalit, was freed from five years of captivity in Gaza.
His freedom came in exchange for the release of 1027 Palestinian prisoners from Israeli jails.
