Surachai Danwattananusorn was sentenced last year to 7 1/2 years in prison for making speeches judged to have insulted the monarchy three times in 2010.
He was a communist insurgent in Thailand in the 1970s and was imprisoned in the 1980s. More recently, Surachai led a faction of the Red Shirt political movement, whose members took to the streets and clashed with the military in 2010.
Surachai, 70, was expected to be released from a prison on Bangkok's northern outskirts today after being pardoned by King Bhumibol Adulyadej, Red Shirt chairwoman Thida Thavornseth said.
Thailand's lese majeste law, which protects the monarchy from defamation, is the world's harshest. It mandates a jail term of three to 15 years.
In most cases, those charged with lese majeste are denied bail repeatedly, with courts usually saying the crime is serious and could affect national security.
Earlier this week, a court sentenced a Thai media firebrand to two years in jail and a woman to five years for defaming the monarch in two unrelated cases.