Pope Benedict made a surprise pre-Christmas visit to the jail holding his former butler, pardoning him for stealing and leaking documents that alleged corruption in the Vatican.
The pope and Paolo Gabriele spent about 15 minutes together on Saturday (local time) before Gabriele was freed and allowed to return to his wife and children in their Vatican apartment, Vatican spokesman Father Federico Lombardi said.
"What they said to each other will remain a secret between them ... he knows he made a mistake," Gabriele's lawyer Cristiana Arru, who was in the apartment when he returned home, said.
Gabriele was convicted of aggravated theft on October 6 in a case that shone unwelcome publicity on the Vatican. He had been serving an 18-month sentence in a jail cell in the city state's police headquarters.
Lombardi called the pope's action "a paternal gesture towards a person with whom the pope shared his daily life for several years ... this is a happy ending in this Christmas season to this sad and painful episode".
Both Lombardi and Arru described the encounter as "intense" because it was the first time the two had seen each other since last May, when Gabriele was arrested after Vatican police found many documents in his possession that had been stolen from the pope's office.
The pope also pardoned a Vatican computer expert who had received a suspended sentence in a separate trial.
In a saga that became known as "Vatileaks", Gabriele leaked documents showing what appeared to be a power struggle at the highest ranks of the Church, and internal conflict about how transparent the Vatican's scandal-plagued bank should be with outside financial authorities.
He told investigators he had acted because he saw "evil and corruption everywhere in the Church" and that information was being hidden from the pope.
The Vatican said Gabriele would no longer be able to work there but would be helped to find a job and start a new life outside its walls together with his family.
"When he came home, the kids jumped up and hung from his neck. It was a very tough time for them. I don't think the whole episode has sunk in for them yet," lawyer Arru said.
Gabriele, 46, said at his trial - one of the most sensational in the recent history of the Holy See - that he did not consider himself a thief and that he was motivated by "visceral" love for the Church.
The butler, who served the pope his meals and helped him dress, photocopied sensitive documents under the nose of his immediate superiors in a small office adjacent to the papal living quarters in the Apostolic Palace.
He then hid more than 1000 copies and original documents, including some the pope had marked "to be destroyed", among many thousands of other papers and old newspaper clippings in a huge armoire in the family apartment inside the Vatican walls.
A former member of the small, select group known as "the papal family", Gabriele was one of fewer than 10 people who had a key to an elevator leading directly to the pope's apartments.
He said at the trial that from his perch as papal butler he was able to see how easily a powerful man could be manipulated by aides and kept in the dark about things he should have known.
The leaked papers revealed inner workings of an institution long renowned for its secrecy, and triggered one of the biggest crises of Pope Benedict's papacy when they emerged in a muckraking expose by an Italian journalist earlier this year.
The case was all the more embarrassing at a time when the Church was trying to limit the fallout from a series of scandals involving sexual abuse of minors by clerics around the world, as well as from mismanagement at its bank.
However, many people believe the butler could not have acted alone and was a fall-guy for others in the Vatican. Gabriele said during the trial that while he may have been influenced by others, he had no direct accomplices.
The Vatican said the pope had also decided to pardon a second Vatican employee and friend of Gabriele's, Claudio Sciarpelletti, who was convicted separately of giving police conflicting testimony and given a two-month suspended sentence.
Sciarpelletti, a computer expert, will be able to keep his job in the Vatican.