A judge in Detroit ordered their release, despite prosecutors' objections, imposing strict conditions including electronic tagging.
The suspects - eight men and one woman - were detained in a series of FBI raids across the Mid-West in March.
They are said to belong to a Michigan-based militia called the Hutaree.
It is alleged they planned to kill a police officer in Michigan and then stage a second attack on the funeral, using landmines and roadside bombs.
Defence lawyers say it is just a case of hate-filled, irrational speech.
'End time battles'
"The United States is correct that it need not wait until people are killed before it arrests conspirators," US District Judge Victoria Roberts said in her ruling.
"But, the defendants are also correct: Their right to engage in hate-filled, venomous speech, is a right that deserves First Amendment protection."
She said federal prosecutors failed to persuade her that the defendants must be jailed until trial, the Detroit Free News reports.
Conditions of their release include remaining under house arrest with electronic monitoring devices and reporting to the authorities every week.
The accused have been named as David Stone Sr, 45, the alleged ringleader, his wife Tina Stone, 44, his son Joshua Matthew Stone, 21, all of Clayton, and his stepson, David Brian Stone Jr, 19, of Adrian.
The other accused are Joshua Clough, 28, of Blissfield; Michael Meeks, 40, of Manchester; Thomas Piatek, 46, of Whiting, Indiana; Kristopher Sickles, 27, of Sandusky, Ohio; and Jacob Ward, 33, of Huron, Ohio.
They were arrested by the FBI at the end of March in the belief that the group was planning a reconnaissance exercise.
The nine have been charged with conspiracy to commit sedition and attempting to use weapons of mass destruction.
A website in the name of the Hutaree group shows video footage of military-style training exercises and describes themselves as "Christian warriors".
A statement on the website says the group are preparing to defend themselves upon the arrival of the Antichrist.
BBC News
