Adnan Ahmad, who was detained midmonth, was released after the investigators determined that he had no links to Shahzad, a naturalised US citizen of Pakistani origin, the Los Angeles Times reported from Islamabad.
Pakistani law enforcement sources said investigators suspected Ahmad because they believed he and Shahzad had exchanged cellphone calls and had met once in Islamabad.
However, after further investigation, Ahmad was cleared of all allegations and any links with Shahzad. He was released Thursday. His brother, Qamar Ahmad, a computer engineer, was also detained, but the sources said he was expected to be released soon.
The law enforcement sources said their suspicions about Adnan were misplaced but they were unable to explain why they initially believed he had telephoned Shahzad.
With the release of Adnan, seven of the 13 people arrested in connection with the Times Square bombing attempt have been released.
Shahzad was arresed at John F. Kennedy International Airport as he attempted to fly to Dubai May 3, two days after he planted an explosives-laden vehicle in Times Square that failed to explode.