J. Jayalalithaa, chief minister of Tamil Nadu, announced the decision one day after the country's top court lifted the death sentences on three of those convicted over Gandhi's assassination in 1991.
"Considering that they have spent over 23 years in prison, the cabinet decided to immediately release Santhan, Murugan and Perarivalan under the powers vested with the state government," Jayalalithaa said, according to news agency Press Trust of India (PTI), after holding an emergency cabinet meeting.
Jayalalithaa said she would also release four others including a woman who are serving life sentences for their roles in the murder.
Gandhi was killed by a female Tamil suicide bomber in the southern state of Tamil Nadu.
Jayalalithaa, quoted by PTI, said the cases would be sent to the federal government immediately for its approval of the release as required, since all seven were originally prosecuted by a national agency.
Her administration would go ahead with their release if the Cong