The Irish Ambassador to Egypt, Sean O'Regan, confirmed that Mr Halawa had been released at around 11pm last night, bringing an end to over four years of detention and an global campaign for his release.
Halawa posted on Facebook: "Finally the day where I can see the sky without bars, smell fresh air, walk freely and smile deeply from the bottom of my heart".
Australian journalist Peter Greste spent over a year in the same prison cell as Ibrahim before being released.
Halawa, a student, and three of his sisters were charged along with almost 500 others with a host of crimes including breaking into a mosque, killing 44 people, and illegal possession of firearms in violence that followed the military's overthrow of Egypt's Islamist president, Mohamed Mursi, in 2013.
"His acquittal and release shows that by standing up for human rights and speaking out persistently in the face of injustice, people have the power to make a real difference".
They were acquitted following trial in absentia.
She hailed Mr Varadkar and Irish Foreign Minister Simon Coveney's efforts to secure her brother's release.
Reuters was not immediately able to reach Halawa's family for comment on Friday, but his sister Fatima told RTE in a radio interview: "It's beyond description ..."
"Finally we were able to sleep for the first time in four years".
"He's receiving full consular assistance at the moment".
The 21-year-old's release comes a month after he was acquitted of all charges related to a mass Muslim Brotherhood protest in Cairo in 2013.
He also appealed for the family's wishes for privacy to be respected.
Mr Halawa, a student and son of a prominent Muslim cleric in Dublin - Sheikh Hussein Halawa - was jailed after being detained in a mosque near Ramses Square in Cairo four years ago amid protests over the removal of president Mohamed Morsi.
Halawa is expected to return to Ireland in the coming days.
He explained that he needed to get an immigration stamp from the Egyptian authorities before he could fly home.