Mahmoud al-Sarsak, 25, arrived by ambulance to a hero's welcome at a Gaza hospital.
In March, Mr Sarsak launched an intermittent hunger strike in protest at his detention but agreed to resume eating in exchange for early release.
Israel accused Mr Sarsak of involvement with the militant group Islamic Jihad, which Mr Sarsak has always denied.
Mr Sarsak had shed considerable weight during his incarceration, the BBC's Farhana Dawood in Jerusalem reports.
"Thank God he is released, I hope that all prisoners will be released," Mr Sarsak's sister, Wafa, told the Reuters news agency.
After being taken to Gaza's al-Shifa hospital, Mr Sarsak returned to his family home in Rafah.
Members of Islamic Jihad were among hundreds who came to welcome Mr Sarsak in Gaza, and the group issued a statement welcoming Mr Sarsak's "victory over the Israeli jailer".
Mr Sarsak was held under Israel's Unlawful Combatants Law, which allows Israel to indefinitely detain without charge or trial foreign nationals suspected of involvement in organisations or activities hostile to the state. Suspects' cases are reviewed by a court every six months.
Israel says Mr Sarsak, a member of the Palestinian football team, was arrested based on information that he was a member of Islamic Jihad, had planted bombs and recruited and trained other militants.
The Palestinian Football Association (PFA) had urged European football's governing body, Uefa, to ban Israel from hosting the continent's under-21 championship next year over the issue of Palestinian players in Israeli detention.
Palestinian Olympic squad goalkeeper Omar Abu Rois and Ramallah player Mohammed Nimr are also being held in Israel without trial.
The global governing football body, Fifa, had last month expressed its concern over Mr Sarsak's detention and asked Israel's football association to take action.
Former Manchester United player Eric Cantona was among those who signed a petition calling for Mr Sarsak's release.
A Palestinian footballer who was in Israeli detention for three years without charge has returned to Gaza.