Robert Halderman was charged with attempted first degree grand larceny last year (09) after threatening to expose The Late Show presenter's affairs with employees unless Letterman bought his silence for $2 million (£1.25 million).
Halderman struck a deal with prosecutors and pleaded guilty to one count of grand larceny in the second degree, which landed him a six-month prison sentence.
He served his time at New York's tough Rikers Island jail and was released on Thursday (02Sep10).
Halderman was freed two months early for good behaviour and will now complete 1,000 hours of community service.
His lawyer, Gerald Shargel, tells the Associated Press, "He survived this, and he's glad to be getting off the island."