The 50-year-old, named by his lawyer as Adbul Merhi, was arrested after five homes were raided on Saturday, which sparked a tightening of security at major domestic and international airports.
Authorities have said a plane was the target and an improvised explosive device was involved, without giving further details. Local media have alleged the men planned to use poisonous gas or a crude bomb disguised as a meat mincer.
Prime Minister Malcolm Turnbull described the plans as "advanced".
"One of those men -– who is 50 years old -– was released from police custody last night (Tuesday) without being charged with a criminal offence," police said in a statement.
"This investigation remains ongoing, and further information will be provided at an appropriate time."
Merhi's lawyer Moustafa Kheir said he would review how police acted towards his client.
"My client Abdul Merhi has been released without charge," he wrote on Twitter.
"Tough few days, but he's relieved the truth is out. I will review police action."
The three other men remain in custody and have yet to be charged, after a magistrate late Sunday gave police an additional seven days to detain them.
Etihad Airways said Tuesday it was helping Australian police with their investigation, amid a report from Sydney's Daily Telegraph that one of the airline's flights to Abu Dhabi was the target.
Local reports have also said the men might have links to the Islamic State (IS) group in Syria, with Justice Minister Michael Keenan only saying "it's clear that this has been inspired by radical Islamic ideology".
Australia's national terror alert level was raised in September 2014 amid concerns over attacks by individuals inspired by organisations such as IS.
A total of 12 attacks, before the latest one, have been prevented in the past few years and 70 people have been charged.
Several terror attacks have taken place in Australia in recent years, including a Sydney cafe siege in 2014 which saw two hostages killed.
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