It was not precisely clear when he will be released, but a message on his Twitter feed read: "We will see each other tomorrow".
The German court said the rebellion charge Puigdemont faced in Spain was not a criminal offence in Germany, while the violence component that would justify a high treason charge was also lacking. He was arrested last week under a European warrant, issued by Spanish authorities over his involvement in the October 2017 referendum on whether Catalonia should be independent from Spain.
"That is not the case here", the court said in a statement.
The court said that because Puigdemont can't BE extradited for rebellion he posed less of a flight risk and could be released on bail.
Mr Puigdemont faces charges of sedition, rebellion and misappropriation of public funds in Spain as a result of his role in last year's Catalan banned independence referendum. They said that there was no indication he could be "exposed to the danger of political persecution".
"Spain respects the German court's decision, a Spanish government spokeswoman said earlier".
German court refuses to extradite ex-Catalan leader on rebellion charge
"There is a risk of flight", the court found in its explanation of its decision to grant bail.
Asked by Reuters whether the German court was correct to say Puigdemont could not now be put on trial for rebellion, neither the Spanish government nor the Supreme Court would comment.
Judge Carmen Lamela said in an indictment that Mossos d'Esquadra chief Josep Lluis Trapero was part of an organized plan to seek Catalonia's secession, which courts have forbidden because the constitution says Spain is "indivisible".
He then came under pressure when central authorities urged the regional police to stop the October 1 referendum banned by Spanish courts.
After a referendum in Catalonia, the central government in Madrid voided the Catalan regional government, imposed direct rule and called new elections.