A Madrid judge had ordered Brett and Naghemeh King to be freed immediately, after prosecutors in England dropped plans to extradite them to the UK.
The five-year-old's brother Danny told Sky News: "I'm in shock, at the moment, we've been waiting so long for this moment to come, and it's finally come."
The Kings were separated from Ashya on Saturday, following a two-day cross-border manhunt initiated by Hampshire Police after they ignored medical advice and removed him from a hospital in Southampton and took him to Spain.
Earlier yesterday, the Crown Prosecution Service (CPS)announced it was no longer seeking their return, following their detention in Malaga on a European arrest warrant.
It came after a day of pressure from a number of senior UK politicians.
Prime Minister David Cameron and his deputy, Nick Clegg, had both called for the family to be reunited in separate statements, with Mr Cameron citing how important it had been for him to be with his disabled son Ivan, who died aged six, in 2009.
Mr Cameron said: "I welcome the prosecution against Ashya King's parents being dropped.
"It's important this little boy gets treatment and the love of his family."
Sarah Lindsell, chief executive of The Brain Tumour Charity, said: "We very much welcome the decision to drop these proceedings against Ashya's parents.
"It was clearly wrong to separate him from his family at a time when he needs them the most and we are thankful that the authorities involved have recognised that."
The decision to seek the withdrawal of the European arrest warrant that sparked the pursuit of the parents emerged during a hearing at the High Court in London yesterday.
Lawyers representing the CPS and Portsmouth City Council told Mr Justice Baker of the plan at the start of a hearing in the Family Division.
Meanwhile, the couple's Spanish lawyer has said the family is considering suing Southampton NHS Foundation Trust - which has defended its handling of the case.