A French court agreed to the release of Lebanese George Abdallah, who was convicted for involvement in the murder of Israeli diplomat Yaacov Bar-Siman-Tov in 1982.
French judicial sources said that the 61-year-old Lebanese man was granted parole on condition that he is expelled from France.
Abdallah was captured in 1984 and sentenced to life in prison in 1987 for the murder of American Lieutenant Col. Charles Ray and the killing of Israeli diplomat Bar-Siman-Tov, in Paris.
Abdallah had been eligible for parole from 1999 onwards but failed in seven previous bids to be released.
Bar-Siman-Tov was murdered in April 1982. A terrorist who waited for him at the entrance to his apartment building shot him in the head three times in front of his wife and kids.
Abdallah's lawyer said his client hopes to return to Lebanon and take up a teaching job there.
"I am disappointed by the decision today," US Ambassador to France Charles Rivkin said in a statement.
"Life imprisonment was the appropriate sentence for Mr Abdallah’s serious crimes, and there is legitimate concern that Mr. Abdallah would continue to represent a danger to the international community if he were allowed to go free.
"I am hopeful that French authorities will appeal today’s decision and that it will be overturned," the ambassador said.