A division bench of Lahore High Court headed by Justice Mazhar Iqbal Sidhu accepted the application of Mastan Singh and granted him bail.
The court dismissed the plea of the prosecution department that bail should not be granted to him till completion of the investigation.
Mastan's counsel advocate Anwar Zahid said sitting president of the PSGPC Sardar Sham Singh had got a 'fake' blasphemy case registered against his client and 25 others.
Nankana police last month registered a blasphemy case against Singh and his 25 accomplices for allegedly attacking a Gurdwara in Nankana Sahib and chanting anti-sate slogans.
They were protesting after being denied permission to take out a rally in Nankana Sahib, some 80 kilometers from Lahore.