The pair, Canadian journalist Mohamed Fahmy and Egyptian national Baher Mohammed, were expected to be released later in the day.
The state-run MENA news agency said a third person, which included multiple other defendants along with Australian journalist Peter Greste, was also pardoned but was not identified by name. Mr Greste was deported earlier this year.
A tweet from Mr Fahmy’s account read:
“Thank you to all the supporters sending us the news, we have heard and are very happy. AJ Staff is Free!”
“I don’t know what to say. It is done. Thank God, thank God,” said Mr Fahmy’s brother Adel.
The three journalists were sentenced to three years in prison last month for airing what a court described as “false news” and biased coverage.
Prominent Egyptian activists Yara Sallam and Sanaa Seif were among about 100 people pardoned by President Abdel-Fattah el-Sissi, according to MENA, on the eve of the major Muslim holiday of Eid al-Adha, when Egyptian presidents usually pardon convicts for health or other reasons.
The pardon came a day before Mr el-Sissi was to travel to New York to attend the UN General Assembly.