"Elor Azria was released home for the Passover holiday," an army statement said.
But the 19-year-old must report back to a military base where he is being detained on Sunday morning after spending time with his family to mark the start of the week-long holiday, the army said.
Azria was warmly greeted by friends and relatives at his home in the central Israeli city of Ramle, where supporters broke out in applause as he arrived.
Passover is a major Israeli holiday that commemorates the Jewish exodus from Egypt in Biblical times.
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Azria, who also holds French citizenship, was charged on Monday with manslaughter and unbecoming conduct over the March 24 killing that took place in the southern West Bank city Hebron.
A widely circulated video showed Abdul Fatah al-Sharif, 21, lying on the ground, shot along with another man after stabbing and moderately wounding a soldier minutes earlier, according to the army.
Azria, who was not at the scene during Sharif's attack, then shoots him in the head without any apparent provocation. His lawyers argued he thought the Palestinian was wearing explosives.
The top brass of the Israeli military have condemned his actions, but rightwing politicians have argued he has been unfairly treated.
Earlier this week thousands of people attended a controversial rally in support of him.