The court in the town of Chekhov, outside Moscow, said 38-year-old Mikhail Kosenko should be released from the hospital for outpatient treatment, a court official told AFP.
The decision came following a request from the hospital and repeated appeals from Kosenko's supporters.
Last October, a Russian court found the activist guilty of participating in a protest on the eve of Putin's inauguration to a third presidential term in 2012.
He was one of a dozen activists accused of mass disorder when a peaceful rally in central Moscow descended into violence.
He was sentenced to undergo mandatory medical treatment at a mental hospital, even though his defence and supporters insisted he was not a danger to society.
The authorities' decision to commit the opposition activist sparked a huge outcry from rights groups and supporters, who said Russia was reviving Soviet-era methods of punishing dissidents.