Prakash, 51, was set free from Kot Lakhpat jail in Lahore this morning. The interior ministry yesterday ordered his release after he completed his 10-year prison term.
Jail officials have taken Prakash to the Wagah land border to hand him over to Indian authorities, TV channels reported.
In May, Pakistan had released 99 Indian prisoners, including 96 fishermen, as a goodwill gesture on the occasion of External Affairs Minister Pranab Mukherjee's visit to the country.