Saif al-Islam Gaddafi, second son of the late deposed Libyan leader Col Muammar Gaddafi, is said to have been freed under an amnesty, in a move which could fuel further instability.
His father’s preferred successor, he had been held by a militia in the town of Zintan for the past six years.
The Abu Bakr al-Siddiq Battalion said he had been released on Friday but he has not been shown in public.
Local reports suggest he is now in the eastern city of Bayda with relatives.
The militia group said it was acting on a request from the “interim government”.
That government – based in the east of the country – had already offered amnesty to Saif al-Islam.
However, he has been sentenced to death in absentia by a court in Tripoli, the west of the country, where control is in the hands of the rival, UN-backed Government of National Accord.
Previous reports of Saif al-Islam Gaddafi’s release proved to be false.
Saif al-Islam Gaddafi: Reformist turned ‘war criminal’
Another unpredictable element: analysis by Orla Guerin, BBC News, Tripoli
If confirmed, the release of Saif al-Islam Gaddafi would add another unpredictable element to Libya’s unstable mix.
He was detained in the desert in November 2011 trying to flee to Niger, and later appeared missing several fingers.
The former playboy often appeared in the West as the public face of the Gaddafi regime and was his father’s heir-apparent.
While reviled by many – at home and abroad – he retains some support in Libya and could try to re-enter the political fray here.
He is also wanted by the International Criminal Court for crimes against humanity during his father’s unsuccessful attempts to put down the rebellion.
Image copyright Reuters Image caption Saif al-Islam, pictured before his capture, was awarded a PhD from the London School of Economics
The 44-year-old – who was controversially granted a PhD by the London School of Economics in 2008 – was captured in November 2011 after three months on the run following the end of Gaddafi’s decades-long rule.
He was previously known for playing a key role in building relations with the West after 2000, and had been considered the reformist face of his father’s regime.
But after the 2011 uprising, he found himself accused of incitement to violence and murdering protesters. Four years later, he was sentenced to death by firing squad following a trial involving 30 of Gaddafi’s close associates.