The inmates had been scheduled for release a week ago Sunday, but there were unexplained delays, Ynetnews reported.
The prisoners met with representatives of the International Red Cross, underwent fingerprint identity verification and had to sign a statement pledging they would never again undertake violence against Israel, the report said.
Prison officials said the release was done in three waves to prevent bottlenecks at border crossings.
Sunday, jailed militant Fatah leader Marwan Barghouti criticized the release, calling it "a joke," Ynetnews said.
"Most of those slated for release would have been freed a few months from now anyway," Barghouti said.
A week ago, the United States hosted a summit for Israeli and Palestinian leaders and scores of Arab and European interests to craft an agenda for peace negotiations.