Martha O'Donovan, 25, was detained November 3 after reportedly tweeting that Mugabe -- one of Africa's longest-serving leaders -- is "a selfish and sick man."
High Court Judge Clement Phiri granted $1,000 bail after a two-hour hearing. "It's my submission that the applicant (O'Donovan) has demonstrated that there are compelling reasons why in the interest of justice she be considered for bail," Phiri told a packed courtroom.
The bail conditions include O'Donovan reporting twice a week to the police, surrendering her passport, not interfering with witnesses and residing at her home until the case is finalized.
O'Donovan was not present for the hearing. Her next court appearance is scheduled for Wednesday.
Defense attorney Obey Shava welcomed the decision to grant O'Donovan bail, saying the state case was weak and the charges "concocted." O'Donovan is likely to be released Friday, he said.
"The last time I saw her she was doing fine and she was anxiously waiting for this outcome, and she is eagerly waiting for the courts to clear her name because she knows she is innocent," he said.
"There is no substance in what the state is saying. It is not Martha O'Donovan which is the real target here. But the whole idea behind the charges is to discourage people from putting their ideas on social media, and it is about a clampdown on social media by the state."
O'Donovan, who works for a satirical video website, is the first person to be accused of plotting to overthrow the government since last month's creation of a cybersecurity ministry intended to police social media.
The US Embassy in Zimbabwe said it was pleased by the bail decision but continued to have concerns regarding O'Donovan's arrest and the charges filed against her.
"The US Embassy is going to stay involved. We will continue to provide consular assistance to Martha and certainly we will work diplomatic angles as well to see if there is any way for Martha to depart Zimbabwe," embassy spokesman David McGuire said.
Rights group Amnesty International called for what it said were "absurd charges" to be dropped.
"Martha O'Donovan should not have spent a single night in jail -- expressing an opinion in a tweet is not a crime. Her arrest was the latest example of the Zimbabwean authorities' utter contempt for freedom of expression," said Cousin Zilala, executive director of Amnesty International Zimbabwe.
"We are calling on the Zimbabwean authorities to stop punishing people simply for exercising their freedom of expression. Social media users must not end up in jail simply for sharing their opinions."
When the Ministry for Cyber Security, Threat Detection and Mitigation was announced last month, presidential spokesman George Charamba told reporters that the new office was intended to "trap all rats" that abused social media.
Mugabe has long been criticized for corruption and abuse of power. At 93, he has ruled Zimbabwe since 1980 with little opposition.