"The Australian people very much wanted to see Cheng Lei reunited with her young kids," Albanese said.
Cheng, a former anchor for Chinese state broadcaster CGTN, had been detained since August 2020.
She was only formally arrested months later and eventually charged with "supplying state secrets overseas" in a case that many saw as politically motivated.
The mother of two had been a familiar face on the state broadcaster's English-language channel, conducting interviews with noted CEOs from around the world.
Born in Hunan province, Cheng is now an Australian national who emigrated to the country as a child, before returning to China and joining the state broadcaster in 2012.
China does not allow citizens to hold dual nationality.
She was tried behind closed doors, with even Australia's ambassador to China blocked from entering the court to observe proceedings.
Australia's government had long campaigned for her release, and for China to follow "basic standards of justice, procedural fairness and humane treatment".
- 'I miss the sun' -
She had written about bleak prison conditions in a candid note dictated to Australian officials from jail and released in August.
"I miss the sun," read the message, described as a "love letter" to Australia. "In my cell, the sunlight shines through the window but I can stand in it for only 10 hours a year."
Albanese said she had been released after the "completion of legal processes in China".
Cheng's case had been a serious point of friction between Canberra and Beijing.
China has repeatedly detained foreign nationals at times of high political tension with their home nations, raising accusations of hostage diplomacy.
Cheng's case has often been compared with that of Chinese-born Australian writer Yang Jun, who has been detained in China since 2019 on vaguely defined espionage charges.
Albanese said that Cheng's release would facilitate his visit to China at a "mutually agreed time" this year.
Australia-China relations had been in deep freeze after Canberra barred Chinese tech firm Huawei from lucrative contracts and pushed back against Chinese influence campaigns in Australia.
China was also furious at Canberra's calls for an investigation into the origins of the Covid-19 outbreak that killed millions and plunged the world's economy into a multi-year crisis.
In retaliation, China introduced a swathe of de facto sanctions against Australian products, measures that have been slowly unwound as relations thaw.
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