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| Ms Suu Kyi appeared at the gate of her compound in a traditional lilac dress |
She has appeared in front of a crowd of her supporters who rushed to her house in Rangoon when nearby barricades were removed by the security forces.
The Nobel Peace Prize winner has been detained for 15 of the past 21 years.
Earlier, Ms Suu Kyi's lawyer warned that she was highly unlikely to accept a conditional release if it excluded her from political activity.
The government has restricted her travel and freedom to associate during previous brief spells of liberty, and demanded she quit politics.
She was originally due to be released from house arrest last year, but a case involving an American who swam across Inya Lake to her home, claiming he was on a mission to save her, prompted the latest detention.
Last Sunday, the political party supported by the military government won the country's first election in 20 years. The ballot was widely condemned.
'Work together'
Since Saturday morning, crowds of people had been waiting anxiously for news of Ms Suu Kyi's fate near her home and the headquarters of her now-banned National League for Democracy (NLD) party. Many wore T-shirts sporting the slogans "We stand with Aung San Suu Kyi".
By late afternoon, a stand-off had developed between armed riot police and several hundred people who had gathered on the other side of the security barricade blocking the road leading to her lakeside home. Some of them later sat down in the road in an act of defiance.
As tensions rose, reports came in at about 1700 (1030 GMT) that the security forces had started removing the barricade.
Soon after, official cars were seen entering the compound, and unnamed officials then said that the release order had been read to Ms Suu Kyi.
Hundreds of people then surged forward and rushed towards her home to greet her.
Ms Suu Kyi then appeared on a platform at the gate of her compound, wearing a traditional lilac dress. The crowd chanted, cheered and sang the national anthem.
"There is a time to be quiet and a time to talk. People must work in unison. Only then can we achieve our goal," she told the crowd.
She then returned inside her home along with senior NLD officials.
Her lawyer, Nyan Win, earlier said that if she was freed without conditions, she would meet with the NLD's central committee, members of the media and the public once she was freed.
He noted that after earlier detentions, she always visited the Shwedagon pagoda, one of the most sacred sites in Burma.
Ms Suu Kyi will address her supporters at the NLD's headquarters at noon Saturday, party officials said.
UK Prime Minister David Cameron said her release had been "long overdue", describing her detention had been a "travesty".
"Aung San Suu Kyi is an inspiration for all of us who believe in freedom of speech, democracy and human rights."
Elections criticised
The decision by Burma's ruling generals to release Ms Suu Kyi follows the elections on Sunday.
Earlier this week, state media announced that partial results showed that the biggest military-backed party, the Union Solidarity and Development Party (USDP), had secured a majority in both houses of parliament.
The USDP had won 190 of the 219 seats so far declared in the 330-seat lower House of Representatives, and 95 of 107 seats in the 168-seat upper House of Nationalities, the reports said.
Those elected included the leader of the USDP, Prime Minister Thein Sein, who retired from the military as a general in April to stand.
The junta has said the election marks the transition from military rule to a civilian democracy, but the opposition, many Western governments and human rights groups have said the election was neither free nor fair.
The NLD - which won the last election in 1990 but was never allowed to take power - was ordered to dissolve after refusing to take part.
A quarter of seats in the two new chambers of parliament will be reserved for the military. Any constitutional change will require a majority of more than 75% - meaning that the military will retain a casting vote.
Source:http://www.bbc.co.uk/news/world-asia-pacific-11749661
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