Josu Ternera, 69, is the target of Spanish extradition requests and a European arrest warrant.
The French court said he would be freed on Thursday under house arrest in Paris while wearing an electronic bracelet.
Ternera, whose real name is Jose Antonio Urrutikoetxea Bengoetxea, was a top figure in ETA, which for decades waged a violent independence campaign that killed hundreds of people.
He was convicted in absentia in 2010 on charges of associating with terrorists after his fingerprints were found in an apartment known to be used by ETA operatives in Lourdes, southern France.
He was sentenced to seven years in prison, and given a new eight-year term in 2017 after again being convicted in absentia of participating in a terrorist organisation.
After eluding police for years, he was arrested on May 2019 at a hospital in Sallanches in the French Alps where he had been due to have an operation that day.
Spanish authorities had been hunting Ternera since 2002 over a 1987 attack on a police barracks in the northern city of Zaragoza that killed 11 people, five of them children.
Ternera headed ETA from 1977 to 1992 and was thought to be behind a strategy of combining car bomb and shooting attacks in the 1980s.