Dr Imran Farooq was stabbed several times and bludgeoned with a brick after he was ambushed by two men outside his home in Edgware, north London, in 2010.
The Metropolitan Police arrested a 31-year-old man in Waltham Forest last year.
He was the third man arrested and released by police over the murder.
Dr Farooq, a prominent member of the Pakistani political party MQM (Muttahida Qaumi Movement), had been living in exile in the UK for more than a decade when he died.
In October last year, the Met released Iftikhar Hussain, the nephew of the MQM London-based leader Altaf Hussain, after arresting him at Heathrow Airport in 2013.
And in 2012, a man was released after being arrested in Camden on suspicion of conspiracy to murder.
The Met said they were continuing to look for two other men, both from Pakistan, in connection with the crime.
The force wants to find Moshin Ali Syed, aged 30, who was in the UK between February and 16 September 2010.
Muhammad Kashif Khan Kamran, 35, was in the UK between early September and 16 September 2010 and is also being sought.
Police believe they left the UK on the evening of Dr Farooq's murder.
A Â£20,000 reward is being offered to anyone with information leading to the prosecution of the politician's killers.
A man arrested over the murder of an exiled Pakistani politician who was attacked on his way home from work has been released without charge.