The appeal court in Colmar, eastern France, placed Haradinaj under judicial control and ordered him to surrender his passport to police while the authorities wait to examine Serbia's extradition request.
He will be summoned to a further hearing on whether or not to comply with the request.
Haradinaj, who led the Kosovo Liberation Army in a war to leave Serbia in 1998-99, was arrested at Belgrade's request at Bâle-Mulhouse airport last week.
After Kosovo became independent in 2008 he briefly became prime minister and is now a leading opposition MP.
During Thursday's hearing the court heard that Serbia has filed accusations with Interpol that Haradinaj had ordered the illegal detention of civilians, that some prisoners had been subjected to torture, inhuman treatment and rape and that "some were killed, sometimes by Mr Haradinaj's own hands".
The accusations are "purely political", Haradinaj told the court in French.
His lawyer, Rachel Lindon, hailed his release as a "first step" towards the annulment of the Interpol notice and the refusal of the extradition request.