Raja Petra, 58, editor of the website Malaysia Today, was being held under the Internal Security Act (ISA).
But the judge said the government had acted outside its jurisdiction when it issued a two-year detention order.
The government alleged that Raja Petra was a threat to national security having published articles that it said created racial tension.
He is due in court later in the day, and will then be freed, the state news agency Bernama reported.
His lawyer, Malik Imtiaz, described Friday's ruling as "historic" and said it was "definitely a wonderful step in terms of civil liberties in Malaysia".
Raja Petra has increasingly angered the Malaysian authorities with his Malaysia Today website, the country's best-known political blog.
He still faces charges of sedition for an article he published which linked Deputy Prime Minister Najib Razak to the 2006 murder of a Mongolian woman, Altantuya Shaariibuu.
Mr Najib, who has consistently denied any involvement, is widely expected to take over as prime minister when incumbent Abdullah Badawi agrees on a transition date.
Raja Petra was arrested on 12 September under the ISA as part of a government clampdown on opposition voices." // 07.11.08, bbc news
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