Reza Taghavi, 71, had not been charged with a crime and denied knowingly supporting the organization, known as Tondar.
"He admitted to nothing and he continues to maintain his innocence," his lawyer, Pierre Prosper, told The Associated Press in a telephone interview from Tehran after his client's release from Tehran's Evin prison. He is not expected to return to Southern California before the middle of next week.
Iranian officials are "comfortable that he was in fact used by this organization, and comfortable that he does not pose a threat to them and that he can leave and go back to the United States," Prosper said.
Iran had accused Taghavi of passing $200 in cash to an Iranian man tied to Tondar. Taghavi, who regularly visits Iran to conduct business and see family, had received the money from a friend in California with instructions to pass the cash to an Iranian, according to Prosper.
"I didn't do anything wrong. Someone just asked me take this money to help someone," Taghavi told ABC News.
"Sometimes I feel relief, sometimes, I feel angry. What happened? Two-and-a-half years for what?" he said.
His family had said he has diabetes and was in poor health, and his lawyer has asked Iran to free him on humanitarian grounds.
Prosper said Taghavi won't be able to leave until this coming week because of conditions attached to his release. While Taghavi never was charged formally or presented with paperwork indicating a charge, Prosper said there is a case within the Iranian justice system. He plans to meet with a judge in the next week in hopes of getting that case dismissed.
The best way to describe the situation, he said, is that the case is suspended and Taghavi is free to leave.
White House spokesman Bill Burton said the Obama administration has not been able to confirm Taghavi's release, but hoped the reports were true. Burton said the White House also continues to urge the immediate release of two American hikers jailed in Iran.
Prosper said he and Taghavi will visit the southern Iranian city of Shiraz, site of an April 2008 bombing at a mosque that killed 14 people. Iranian authorities blame the group that Taghavi is suspected of being involved with, and told Taghavi to meet with victims of the attack.
"He feels aggrieved. He feels used" by his friend back home who provided the cash, Prosper said.
Prosper had five direct meetings with Iranian officials since Taghavi was jailed. Three were in Iran, one in New York and one in Europe.
A family representative, Ric Grenell, said Taghavi planned to hold a news conference upon his return to the United States.