Robert Pether was arrested following a dispute with the Iraqi government and his employer, a consulting firm working on headquarters for the country's central bank.
He was sentenced in 2021 to five years in prison and fined millions of dollars.
Mr Pether was granted a conditional release on bail in 2025 and on Monday he was allowed to leave Iraq.
Foreign Minister Penny Wong welcomed the decision to let Mr Pether leave.
"I spoke to Mr Pether shortly before his departure from Baghdad and am pleased he is now free to move forward with his life and be reunited with his family," she said in a statement.
"Mr Pether had been imprisoned in Iraq for more than four years and was later subject to travel restrictions that prevented him from leaving the country.
"Today's outcome follows many years of persistent advocacy by the Australian government, including at the highest levels of government, and sustained consular assistance to Mr Pether and his family."
A United Nations report on arbitrary detention detailed allegations that Mr Pether was subject to extreme cold, humiliation, threats of death and forms of psychological abuse, including being shown a torture room.
Mr Pether is planning to fly to Ireland to reunite with his wife and children.
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