Padgett, who was arrested last Thursday in the highly publicized case, has not been formally charged and will not be arraigned on Monday, according to a news release from the San Diego County District Attorney's Office.
District Attorney spokesman Steve Walker said San Diego detectives had not submitted their investigation to the District Attorney's Office and no criminal charges had been filed.
Police have scheduled a 3 p.m. news conference to discuss Padgett's release.
Surveillance image of a man San Diego police still describe as a suspect in the killing of three homeless people in the city.
He was suspected of killing three homeless men and severely injuring a fourth during a almost weeklong spree of mayhem.
Padgett, who faced charges of murder and attempted murder, reportedly was a transient himself and had been convicted of setting fire to a friend in Chula Vista in 2010.
Nisleit had said that detectives had legitimate probable cause to arrest Padgett last week, but later discovered "exculpatory evidence", and releasing the suspect was "the appropriate decision" in light of the developments.
"You will continue to see additional (staffing) resources throughout the city as we continue to work this investigation around the clock, " Nisleit said.
The fourth man who the serial killer murdered was Dionicio Derek Vahidy, 23, last Wednesday. "We need your help. This all takes some time".
San Diego's Metro Arson Strike Team and SDPD homicide team gather evidence from the sidewalk and grassy area where a homeless person was attacked in downtown San Diego.. He suffered extensive trauma to his upper torso and died before his body was set alight.
In a three-page handwritten note to a judge in 2010, Padgett blamed the influence of drugs - saying he was "super stoned and intoxicated plus using my prescribed medications" - and that he only meant to scare the victim, who was a friend.
The attacks began on 2 July when the body of Angelo de Nardo, 53, was found on fire between a local freeway and train tracks.
When Padgett was arrested, authorities wouldn't disclose a suspected motive for the attacks, but said they did not believe there were any outstanding suspects in the case. An autopsy determined that De Nardo died prior to being set on fire. A witness pulled away a burning cloth that the attacker put on him before fleeing.
The next day, officers responding to a 911 call found Manuel Mason, 61, with life-threatening injuries to his upper torso.
The third victim, Shawn Mitchell Longley, 41, was found dead near tennis courts at Robb Field in Ocean Beach on July 4.