Ouda Tarabin has returned to Israel, the office of the Israeli Prime Minister Benjamin Netanyahu said on Thursday.
"At the same time, Israel has released two Egyptian prisoners who were imprisoned in Israel who have finished their sentences," the statement said.
Neither the Israeli officials nor the Egyptian government provided more details on the Egyptian nationals. It was also not immediately clear if the prison terms were made shorter through diplomatic efforts.
Cold peace between Tel Aviv and Cairo
Israeli Arab Ouda Tarabin, originally from a Bedouin tribe on Egypt's Sinai Peninsula, was arrested in 2000 for crossing into Egypt illegally. He was 19 at the time.
The authorities then informed Tarabin that he had been tried in absentia on spying charges. He was subsequently sentenced to 15 years in prison.
Tarabin has maintained his innocence over the years.
Before his arrest, he has traveled to Egypt regularly, allegedly to visit his two sisters in the port city of El-Arish.
Israel has repeatedly called for Tarabin's release, hinting at a prisoner swap.
Israel and Egypt have signed a peace treaty in 1979, and the two sides have maintained cool but peaceful diplomatic relations since.
dj/jil (dpa, AP, Reuters)