The 29-year-old, who underwent a gender transition in prison, has taken to Twitter to celebrate, saying “First Steps of Freedom, #ChelseaISFree.”
Ms Manning was convicted under the Espionage Act for releasing government cables detailing secret government operations to Wikileaks in 2010.
The Oklahoma native was convicted of 20 counts including theft, computer fraud and six violations of act. She pleaded guilty for leaking the information but was acquitted of the charge of “aiding the enemy.”
Mr Obama told the media that “she had served a significant amount of time, that it made sense to commute, and not pardon, her sentence.”
The leak was of the largest of its kind at the time with over 250,000 cables being released including detailed instructions to foreign embassies to gather intelligence on UN leaders.
It followed the Iraq and Afghan war logs leak in July and October of the same year.
Ms Manning, then Bradley, was apprehended in Baghdad by US officials in 2010 and spent over 1,200 days in military custody which were removed from her sentence upon her conviction in 2013.
Ms Manning’s Attorney, Nancy Hollander, claimed her client’s “whole prosecution was unfair” and that “Chelsea wants very much to be a productive citizen, to help people.”
Chelsea Manning’s incarceration sparked controversy in the USA at the time of her trial.
President Trump called the former intelligence analyst an “ungrateful traitor” following her release, claiming she “should never have been released from prison.”