Hossein Rassam, an Iranian national, worked at the Embassy as an expert on Iranian politics. He was freed from Evin prison in Tehran on bail.
His arrest, along with that of eight other Iranians who worked for the Embassy, caused a major diplomatic row between Britain and Tehran. David Miliband, the Foreign Secretary, expressed "cold anger" over the treatment meted out to the local staff at the British mission.
All of those detained have now been released, although it is not clear whether Mr Rassam might face further proceedings.
Hundreds of thousands of people joined the marches against President Mahmoud Ahmadinejad's supposed election victory, which was declared despite evidence of ballot rigging.
Iran's regime was accused of trying to distract attention away from the crisis by blaming the protests on Britain, America and other foreign powers.
Evin prison, where Mr Rassam was held, has a grim reputation and political prisoners have often been tortured in its cells. But the official's lawyer, Abdolsamad Khorramshahi, confirmed his release and said he was unharmed.
