A magistrate ordered General Vang be released on a $1.5 million bond.
He and 10 other defendants are accused of plotting to spend millions of dollars on weapons to topple the government in the capital, Vientiane.
General Vang is a revered figure for many of Laos' ethnic Hmong community in the United States.
He has been allowed to return to his southern California home under extremely strict conditions, but prosecutors say the 77-year-old is "the most dangerous" of the defendants and should be kept in detention pending his trial.
His arrest has outraged Hmong in the US, with large protests outside government buildings in Sacramento against his detention.
"We're just happy he's released, and I'm sure the Hmong community is happy," said John Balazs, Vang Pao's lawyer.
General Vang and 10 other men are accused of planning to buy nearly $10 million (£5 million) worth of machine guns, anti-aircraft missiles, rocket-propelled grenades, mines and other weapons to topple the government in Laos.
The men face a possible life sentence if convicted.
General Vang made his name after leading a CIA-trained guerrilla army against the communists when the Vietnam War spread into neighbouring Laos during the 1960s.
When Laos fell to the communists, he and as much as a third of the country's ethnic Hmong population fled to neighbouring Thailand amid fears of retribution for siding with the Americans.
While many Hmong settled in Thailand, or moved on to the US and elsewhere, thousands stayed behind in Laos.
Many retreated into the forests from where they were rumoured to be carrying out a low-level war against the Vientiane government.
Hmong activists and human rights activists say those in the jungle have long-since ceased to pose a threat, yet the government continues to wage a campaign of vengeance against them.
The few journalists who have managed to track down some of them say they have been isolated by government troops and are malnourished, wounded and in need of shelter.
Analysts have speculated that this - and the fact that Thailand recently agreed to forcibly return any new Hmong refugees to Laos - could have been a strong motivating factor behind any alleged coup plot.
Güncelleme Tarihi: 14 Temmuz 2007, 08:59