A cabinet statement issued Friday evening announced the pardon, part of an early release for 1,140 convicts.
Ingabire, who was sentenced in 2013, was serving 15 years on charges of terrorism. Human Rights Watch said the charges against Ingabire, who was trying to challenge Kagame in the 2010 elections, were politically motivated.
Ingabire was accused of collaborating with the mainly Hutu Democratic Forces for the Liberation of Rwanda (FDLR) rebel group operating in neighboring Democratic Republic of the Congo.
The announcement follows criticism by rights activists of Kagame for stifling dissent and comes as the country seeks to widen its global influence. Kagame is the current head of the African Union and his government is lobbying to lead the Organisation Internationale de la Francophonie, which works to promote cooperation between French-speaking nations and states on issues including human rights and democracy.
“The president has granted mercy, and under the constitution, he is allowed to do that,” he said, when asked for comment, adding that she had asked for mercy two times in the past, including last June.
The precise time of Ingabire’s release was not immediately clear but officials and lawyers said it would be on Saturday.
Kagame is lauded for Rwanda’s economic recovery after the 1994 genocide but critics say he has muzzled free media and dissenting voices.
She returned from exile in the Netherlands to contest a presidential election in January 2010, but was barred from standing after being accused of genocide denial.
Her lawyer welcomed the decision to free her.
“Since the beginning of the trial we have been requesting her release and now that she is going to be free, we are all happy,” Gatera Gashabana told Reuters.
More than 800,000 people were killed in Rwanda when an ethnic Hutu-led government and ethnic militias went on a 100-day massacre.
Afterwards, Kagame, who won a third term in August last year, was lauded for bringing about economic improvements, but he has faced increasing accusations of human rights abuses, suppression of the opposition and reining in the media.