- Rwigara, a 37-year-old accountant, was blocked from challenging Kagame in the August 2017 presidential election and arrested a month later.
- The bail was granted on condition that both Rwigara and her mother do not travel out of the capital Kigali.
- Their trial will resume in November.
A Rwandan High Court on Friday granted bail to Diane Rwigara, a prominent critic of President Paul Kagame, who had been jailed for over a year awaiting trial.
Rwigara, a 37-year-old accountant, was blocked from challenging Kagame in the August 2017 presidential election and arrested a month later, along with her mother, for alleged tax evasion and forgery as well as for inciting insurrection.
A panel of three judges ruled that the prosecution had failed to provide credible reason why the pair should be kept in detention, and ordered their immediate release on bail.
The decision was received with screams of joy from relatives who were packed inside the small courthouse in Kigali.
The bail was granted on condition that both Rwigara and her mother do not travel out of the capital Kigali, and that their travel documents be handed in to authorities.
Their trial will resume in November.
Anne Rwigara, a younger sister who was also briefly detained with her sibling and mother last year - but released without charge - welcomed the decision.
"This is a very good surprise. They are innocent and we know these charges against my sister and mother are not true but were simply made up for political purposes. I cannot believe they are coming home," she said.
The decision was also welcomed by opposition voices in the country, such as Victoire Ingabire, who was recently granted a presidential pardon after serving four years of a 15-year sentence for treason and genocide denial.
"Rwigara's arrest was politically motivated and I am glad that she and her mother have been released just weeks after I was myself granted a presidential pardon. It is a sign that the political maturity of Rwanda is growing," Ingabire told AFP.
Rwigara is the daughter of Assinapol Rwigara, an entrepreneur who made a fortune in industry and real estate, and a main backer of Kagame's Rwandan Patriotic Front (FPR) during its efforts to topple the Hutu extremist regime in 1994, ending the Rwandan genocide.
Diane Rwigara later distanced herself from the FPR after her father's death in a car crash in 2015, which she has claimed was an "assassination".
Shortly after she and her mother were arrested, the Rwanda Revenue Authority began selling off family assets in a bid to recover over $5 million (4 million euro) it says the family owes in tax arrears.
President Kagame won the election in 2017 with 98 percent of the vote after blocking Rwigara, and running against one opposition candidate and a little-known independent candidate.
He has been praised for bringing economic stability to the country following the 1994 genocide, in which some 800,00 ethnic Tutsis and moderate Hutus were killed by Hutu extremists.
But human rights groups accuse him of suppressing democratic opponents, ruling through fear and muzzling media.