Khalil al-Marzouq, a former parliament member, was detained in September by police investigating his alleged promotion of terrorism, causing outcry from his al-Wefaq party, Bahrain's largest opposition group.
Unrest has gripped Bahrain since a 2011 uprising led by its Shia majority demanding reforms and more share in government in the kingdom ruled by the Sunni al-Khalifa dynasty.
The arrest of Marzouq prompted the Wefaq party to suspend its participation in talks with the government aimed at ending the turmoil in Bahrain, which hosts the US Fifth Fleet.
Marzouq, appearing in court for the first time amid tight security, denied all charges. The judge said he could go free until his next hearing on November 18.
His wife, speaking at the courtroom after the ruling, said Marzouq was due to be released later on Thursday.
"There are usually no releases in similar cases when it is related to terrorism charges, but I think such a ruling was intended to placate public opinion," said Mohammed al-Maskati, head of the Bahrain Youth Society for Human Rights.
Talks between the government and its opponents began in February, but have failed to resolve the political crisis, with the two sides still mistrustful and apparently far apart on the opposition's main demand for an elected government.
Wefaq, which says it advocates non-violent methods, demands a constitutional monarchy with a government chosen from within a democratically elected parliament.
On Tuesday, Wefaq said Marzouq's trial shows "the political persecution and exclusion the authorities are practicing", accusing them in a statement of "taking advantage of their power for vengeful purposes against those demanding democracy".
Bahrain's chief prosecutor, Nayef Yousfi, said last month that police investigations showed Marzouq had spoken at many forums promoting what the authorities described as terrorism.
At one event, Marzouq had raised the flag of the February 14 Coalition, a network of people who use social media to organize anti-government protests, Yousfi said, describing the group as a terrorist organization.
The coalition is named after the date when mass pro-democracy protests erupted in Bahrain in 2011. The authorities quelled the uprising a month later, with the help of Saudi security forces.