Jose Manuel Mireles, who rose to become the most famous figure of Michoacan's vigilante movement, was granted release on bail by a district court in the western state of Michoacan.
The Federal Judiciary Council said the court had lifted the order for Mireles' preventive detention "so that he can continue his trial in liberty."
It said he can leave prison once he has posted bail equivalent to $1,500 and under condition he not leave the state or contact certain people.
Mireles was arrested in June 2014 on drugs and weapons charges shortly after his armed group entered a town, despite a pact that the militia movement made with the government to disarm.
The tall, mustachioed Mireles along with local farmers founded the so-called "self-defense" militias in 2013 to fight off the cult-like Knights Templar drug cartel.
His arrest came shortly after the government folded the vigilante movement into an officially sanctioned "rural defense" force, a move that Mireles opposed.
The Knights Templar cartel has been severely weakened by arrests of its leaders, who had terrorized Michoacan for years through murder, kidnapping and extortion.
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