"We are very happy. Thank God he is safe and sound," said Raja Basharat, the grand-uncle of five-year-old Sahil Saeed, who is from the English town of Oldham.
Interior Minister Rehman Malik had said he suspected relatives were involved in the abduction, which made big news in the British media.
Police in Jhelum, the town where the boy was kidnapped, had said the gunmen who abducted him after holding relatives at gunpoint for several hours took away 150,000 rupees ($1,750) and some gold and later demanded a 10-million-rupee ($118,000) ransom.
The circumstances around the boy's release were not immediately clear.
"It is fantastic news which brings an end to the traumatic ordeal faced by Sahil and his family," the British High Commissioner in Islamabad, Adam Thomson, said in a statement.
"I would like to praise the high-level of cooperation between UK and Pakistani authorities and in particular, I would like to thank the Jhelum police for their role in bringing about the safe return of Sahil." Police have said Taleban militants use ransoms from kidnappings to fund their insurgency against the US-backed government.
But there were no signs that the latest kidnapping was linked to militants.
