The state government acted late on Thursday night on the advice of the home ministry, which asked that the militants be released.
"Their detention orders under the Public Safety Act (a law that allows the government to keep people in jail without trial for two years) have been revoked and they would be sent to Wagah in Punjab for their return to Pakistan," an official told said on condition of anonymity.
The process for their release was initiated about two months ago after their detention came under sharp criticism from human rights groups.
The militants were also given consular access at Amritsar, government sources said.
"This is nothing new. It has happened in the past, too," a source said.
All 25 Pakistani militants, who would be handed over to Pakistan authorities at Wagah Friday, were arrested over the years from Jammu and Kashmir.
Some of them were involved in acts of terror, the sources said, but did not specify the exact nature of crime committed by them.
Some of them were lodged in jails outside Jammu and Kashmir for security reasons.
