Geoffrey van Cromvoirt, 19, was accompanied by family members as he walked to a parked car after his release.
Van Cromvoirt, who was identified by authorities only as "G.V.C.," had been in custody for nine days, and authorities at the time of his arrest said he was suspected of "criminal offenses that may be related to the disappearance" of Holloway, an Alabama teenager who last was seen May 30 on the Dutch-Caribbean island while on vacation.
"Today, the suspect G.V.C. has been released from police custody," Aruban prosecutors said in a brief statement. "He has been released because the grounds for his detention are no longer there."
The prosecutor's office said Van Cromvoirt remains "a suspect" in the case.
Eline Lotter-Homan, Van Cromvoirt's defense attorney, maintained her client's innocence in the case. In comments made to the press shortly after the release, Lotter-Homan said her client was pleased to be free.
On Saturday, a 20-year old man with the initials "E.B." was arrested in the Holloway case and was released after six hours.
Aruban authorities have arrested seven people in connection with Holloway's disappearance and later released them for lack of evidence.
Dutch marines, the Aruban Coast Guard, the FBI and hundreds of volunteers have searched the island and coastal areas for Holloway, to no avail.