Patrice Pade, 39, was arrested in connection with the death of Caroline Dickinson, 13, at Pleine Fougeres, Brittany, three weeks ago and was reported to have confessed to the killing.
His lawyer, Rene Blanchard, secured his release yesterday before the examining magistrate, Gerard Zaug, after DNA tests failed to support the charge against his client.
Mr Pade was freed on condition that he stays at an address given to the authorities. Mr Blanchard said: "I think the authorities acted too fast. The police went too quickly but not the investigating magistrate.
"My client is no longer a suspect. He will have to speak to police again on various matters but I am very pleased with the way this has turned out."
The development has shocked residents of Pleine Fougeres, near Mont-St Michel.
Caroline was on a school trip to Brittany with Launceston College, Cornwall, when she was found dead on her mattress in the dormitory she was sharing with four others at a youth hostel.
Yesterday, as Mr Pade left jail at Ploemeur, near Lorient, with his head covered, new rumours about suspects were circulating in Pleine Fougeres.
One pointed a finger at a young blond man, dressed in a parka, who was reported to have threatened a German tourist two days before Caroline's murder and who was seen the day after by a French girl.
Questions were also being asked about a possible connection with the rape and murder of an 11-year-old French girl found four days after Caroline's death in the Brittany town of Redon, about 100 miles away.
Michel Bazarewski, a father of three with a history of sexual offences, has allegedly admitted he did it. Officially, no connection has been made between the two murders.
Christian Couet, the Mayor of Pleine Fougeres, who attended Caroline's funeral in Cornwall, expressed dismay at the development. "When someone is arrested and confesses the crime that he is suspected of, there is no reason to doubt him," he said.
Other people were questioned after Mr Pade's arrest but the townsfolk believed the investigators were simply putting the finishing touches to the inquiry, Mr Couet said. "Besides, these further interviews appear not to have provided any further clues."
But the manager of a hotel 200m from the youth hostel where the murder took place said many villagers had had their doubts.
The man, who did not give his name, said: "The fact that Patrice Pade is not the rapist does not surprise us at all. From the start, this arrest always seemed bizarre to us; it was all too swift, too easy."
When news of the DNA test results emerged on Tuesday, Caroline's parents, John and Sue Dickinson, expressed dismay that the "small consolation" gained from the quick arrest was to be denied them.Reuse content