"We were not terrorists before, nor are we now, and the court has proved that we are innocent," Ishaq told his supporters.
Chaudhry Jehangir, the chief prosecutor for Punjab province, said Ishaq had been freed after the Supreme Court agreed on Tuesday to bail conditions of one million rupees (,000).
Defence lawyer Qazi Misbahul Haq said his client, arrested in September 1997, was implicated in 45 cases, mostly murder.
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He was also accused of masterminding, from behind bars, the 2009 attack on the Sri Lankan cricket team in Lahore, which wounded seven players and an assistant coach, and killed eight Pakistanis.
The attacks saw Pakistan stripped of its right to co-host this year's cricket World Cup and the country has since hosted no top foreign teams.