Haddam was arrested in December 1996 by immigration officials because he lacked a visa, and detained in Virginia.
"He is free, I talked to him this morning," said Ibrahim Hooper, a spokesman for the Council on American-Islamic Relations, a Muslim advocacy group based here.
Hooper said the United States had recently granted Haddam political asylum.
The US Immigration and Naturalization Services (INS) did not immediately confirm the release Friday morning.
In May, Haddam was denied asylum after earlier being granted it in error, the INS said.
In the early 1990s Haddam was considered a member of the now-banned Islamic Salvation Front, close to the hard-line Armed Islamic Group. He later distanced himself from the groups but Algerian authorities continued to consider him a terrorist.