Palestinian mediator Kamal Sharafi gave no further details, including where the family was released or who had kidnapped them.
Kate Burton, 25, a worker with the Al-Mezan human rights group in Gaza, was kidnapped with her parents Wednesday by Palestinian gunmen in the southern town of Rafah. There was no claim of responsibility, and officials did not say what demands the kidnappers had made.
Jamil Sarhan, Mezan's executive director, said the family was "fine, in good health."
The kidnapping was the latest in a string of abductions of foreigners in recent months, underlining the inability of Palestinian leader Mahmoud Abbas to impose law and order in the coastal strip since Israel withdrew from the area in September. The growing unrest has threatened to weaken Abbas ahead of parliamentary elections scheduled next month.
Palestinian official Saeb Erekat said he was pleased the hostages had been released. "We urge all Palestinians to make this incident the last of the kidnappings of foreigners or anybody else," he said. "The harms and destroys Palestinian interests."
Palestinian officials worked closely with British diplomats to secure the hostages' release. A British diplomat confirmed the hostages had been freed.
In previous abductions, the kidnappers have sought jobs in the Palestinian security forces, the release of imprisoned relatives or other personal favors. In all cases, the victims have been released safely.
Abbas' critics have accused him of giving in to kidnappers' demands, thereby encouraging more abductions.
Separately Friday, Muslim and Palestinian groups in Britain issued a joint statement calling for the Burtons to be freed.
"We fear that the kidnapping of Kate Burton — who is a well known activist in defending the human rights of the Palestinian people — and her parents will tarnish the civilized face of the Palestinian people and weaken the international support to their just cause," said the statement.
"We and all those who support the Palestinian people and their right in freedom and independence reject any kidnapping in principal and reject to use the lives of innocent people in internal negotiations."
The head of the Muslim Council of Britain also called Friday for the swift release of the Burtons.
"Mrs. Burton, Kate's mother, has been active in the inter-faith movement in the UK and Europe for many years," said Sir Iqbal Sacranie, secretary-general of the council.
"The family's abduction and exposure to danger is absolutely unlawful, totally unjustified and counter-productive," he said.