Florian Norbu Gyanatshang landed in Frankfurt at 6:15 am along with an English activist who was also released by Chinese officials.
Gyanatshang and three other demonstrators were arrested for displaying a Tibetan flag near Olympic facilities on Thursday evening.
The 30-year-old Stuttgart software developer has a German mother and a Tibetan father and heads the German arm of the Tibetan Youth Association.
The German Foreign Ministry was informed by the German embassy overnight that Gyanatshang had been released, a ministry spokesperson said.
The Briton, 41-year-old Mandy McKeown, was released after British Prime Minister Gordon Brown used a visit to Beijing for the Olympic closing ceremony to personally secure her release, an official from his Downing Street office told news agency AFP.
China also deported eight Americans who were detained in Beijing last week after a the US embassy said in Beijing on Monday.