The 26-year-old was left out of Wheatfield Prison, Dublin, on Saturday evening after security concerns were raised about the plan to release him this morning.
In 2011, Mr Dundon was jailed for his part in an attempt to extort protection money from an innocent nightclub promoter.
In Dec 2010, Mr Dundon pleaded guilty before the Special Criminal Court to working with a number of accomplices to try extract €20,000 from the promoter, Mark Heffernan Jr.
Mr Heffernan had to be placed under 24-hour garda protection.
Mr Dundon, of Hyde Avenue, Ballinacurra Weston, was granted early release, with two years still to run on his sentence. It was reported that he has plans to move to England.
On Saturday, he was collected outside the prison, shortly after dark, in a black BMW.
Mr Dundon clocked up 99 convictions before he went into Wheatfield.
The McCarthy-Dundon gang, of which he was a part, spread fear across his native city during its feud with the Keane-Collopy faction.
The 26-year-old’s three older brothers Wayne, John, and Desmond are still in jail.
John and Desmond are serving life sentences for the murders of Shane Geoghegan and Kieran Keane respectively.
They have taken joint High Court challenges against their 23-hour segregation in Portlaoise Prison.
Wayne Dundon is in jail for threatening to kill two brothers of April Collins, who was a key witness in the conviction of John Dundon.