Kevin Garratt returned to Canada on Thursday, Ottawa confirmed in a statement.
"We are delighted that Kevin Garratt has returned safely to Canada and is with his family once more," Canadian Prime Minister Justin Trudeau said in a statement.
Trudeau said Canadian officials "at the highest levels" were involved in securing Garratt's release.
In a statement, the Garratt family thanked everyone "for their thoughts and prayers, and also thanks the many individuals who worked to secure Kevin's release."
"Please respect the family's privacy in this time of transition. We will be releasing more information in the coming weeks."
Garratt ran a cafe with his wife Julia in Dandong, a Chinese city near the border with North Korea, when he was arrested
in August 2014 on suspicion of stealing information about "military and national defense research."
The couple had lived in China since 1984 and running the coffee shop for almost six years at the time of their arrest. Deeply religious, the pair were involved in sending food aid to North Korea. Their son Simeon dismissed claims that they conducted any sort of espionage as "wildly absurd."
Garratt was charged with spying and stealing state secrets in January
, with state news agency Xinhua saying at the time that prosecutors had "found evidence which implicates Garratt in accepting tasks from Canadian espionage agencies to gather intelligence in China."
Julia Garratt was released on bail in February 2015.
Chinese Premier Li Keqiang was asked about the Garratt case during a press conference with Trudeau last month. Li said the Canadian would be treated humanely and his case would be handled in accordance with Chinese law.
Garratt's release comes amid an ongoing charm offensive by Ottawa since Trudeau's election in late 2015
Trudeau, whose father Pierre reopened ties with China in 1970, has called for a "reset" in Canada-China relations.
"Canada is working to renew ties with China to help grow the economy, strengthen the middle class, and develop long lasting ties between the peoples of both countries," he said in a statement
this month following a visit to Beijing and Shanghai.
During that visit, Trudeau signed
$912 million in trade deals, opened new visa centers, and began steps to possibly join China's AIIB investment bank.
Not everything has been rosy however. In a press conference in Ottawa in June, Chinese Foreign Minister Wang Yi angrily berated a journalist
who asked about China's record on human rights.
"Other people don't know better than the Chinese people about the human rights condition in China and it is the Chinese people who are in the best situation, in the best position to have a say about China's human rights situation," he said.