Spanish authorities suspect Iker Rodrigo Basterrechea, a top official the Basque nationalist party Sortu, of being one of the main organizers of a ceremony held at the airport in Bilbao on Friday when the remains of Javier Lopez Pena arrived back in Spain.
Police arrested Basterrechea, the former leader of Batasuna, ETA's banned political wing, on Monday in Bilbao, the financial and industrial capital of Spain's northern Basque Country.
Spain's High Court, the country's top criminal court, charged Basterrechea with incitement to terrorism on Tuesday, a court official said.
"He was released but must report to the police station closest to his home every month and his passport was seized," the official added after Basterrechea appeared in the Madrid court.
Hundreds of people marched through the streets of the Basterrechea's hometown of of Erandio near Bilbao on Monday night to demand his release.
"Neither Sortu, nor any other organisation, had anything to do, or participated, in the organisation of the reception or the funeral for Javier, which was staged by us, his family," Lopez Pena's family said in a statement quoted by Spanish media.
Lopez Pena died last month at Paris' Pitie-Salpetriere hospital after suffering a stroke at the age of 54.
Known by various aliases, including "Thierry" and jailed in France since 2008, he is believed to have become leader of ETA in 2006.
Spanish authorities suspect him of having been one of the masterminds of a 2006 car bombing at Madrid airport that killed two people, ending a ceasefire by the banned group.
ETA announced in October 2011 that it was giving up its armed struggle but has yet to officially disarm.
The organization, considered a terrorist group by the European Union and the United States, is blamed for more than 800 deaths in its quest for an independent Basque homeland over a 40-year period.