Prison officials said the five have been handed over to the immigration authorities for further action.
"President Mahinda Rajapaksa issued a presidential pardon for them," Presidential spokesman Mohan Samaranayake said.
The Indian High Commission here said the five fishermen would not serve their sentence in India.
The mission said it was in the process of working out the exact modalities of their release.
"Yes they have been released and handed over to the High Commission. They will be sent to India and will not serve their sentence there. We are currently working on the modalities of the release," a High Commission spokesperson said.
The move comes less than a week before the SAARC summit in Nepal which will be attended by Rajapaksa and Prime Minister Narendra Modi.
Emerson, P Augustus, R Wilson, K Prasath and J Langlet, all hailing from Tamil Nadu, were apprehended in 2011 and were sentenced to death by the Colombo High Court on October 30 for alleged drug trafficking.
The court ruling had triggered fiery protests in parts of Tamil Nadu and sporadic violence broke out in and around Rameswaram island as a large number of people staged protests.
India on November 11 had filed an appeal in the Supreme Court of Sri Lanka against a verdict of the high court awarding death sentence to them.
Rajapaksa and Modi had a telephonic conversation last week on the issue.
The issue of fishermen is a very emotive matter for both Sri Lanka and India, where Tamil Nadu-based parties including AIADMK and DMK have been regularly pressing the government to take up the matter with the Lankan authorities seriously and have often resented high-profile visits from the island nation.

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