O'Barry, 75, was taken into custody Monday, on the eve of Taiji kicking off its controversial six-month dolphin hunt, for allegedly failing to carry his passport after being stopped by police.
"He was released at 8:40 pm (1140 GMT) on Tuesday," a local police spokesman told AFP.
"He admitted to not carrying his passport -- there was no need to keep him in custody."
He will likely face a fine of up to 100,000 yen (USD 830), but the arrest of a foreigner in Japan for not carrying a passport is rare. Police said they had initially questioned O'Barry on suspicion of drunk driving.
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Police have dispatched more officers to the town for the hunt in anticipation of possible clashes between locals and activists.
Immigration authorities have denied entry to anti-whaling demonstrators at airports, according to conservation group Sea Shepherd.
In the annual catch, people from the southwestern town corral hundreds of dolphins into a secluded bay and butcher them, a scene thrust into the global spotlight in "The Cove".
Environmental campaigners visit the town every year now to watch the hunt.
O'Barry, who found fame first in the 1960s for catching and training five dolphins for the well-known TV series "Flipper", has recently fought against keeping the mammals in captivity.