The Spanish priest, who was arrested by a police unit on Monday for allegedly dealing Viagra, has been released.
The competent court in the town of Don Benito in southern Spain released the priest under certain conditions, several media reported unanimously on Tuesday afternoon.
The priest's passport was confiscated and he must appear in court on the 1st and 15th of each month.
The priest said through his lawyer that he was innocent.
"Everything that is being reported is absolutely false. There is no evidence to incriminate him," said the lawyer.
Meanwhile, the second person arrested, a man named in the media reports as the priest's partner, remains in custody.
The police announced that, contrary to previous reports, they had not found any Viagra during the raid on the priest's flat.
However, they did seize two kilograms of mephedrone, a psychoactive substance from the amphetamine group, which can lead to an increase in sexual sensation in users.
The officers also found 3,300 euros in cash, precision scales and several mobile phones.
In the Spanish media, the police operation is also referred to as "Operación Botafumeiro" ("Operation Incense Burner").
This alludes to the 1.60 metre tall and 54 kilogram censer that is swung through the cathedral of the pilgrimage site of Santiago de Compostela in northern Spain.