Sixty-tow-year-old Yadav, who was lodged in the high-security Dasna jail since December 7 after being convicted by a Central Bureau of Investigation special court, walked free after furnishing a bail bond of Rs 5 lakh.
Flex Industries owner Ashok Chaturvedi (57), who was sentenced to a four-year imprisonment along with Yadav in the case, was also granted bail by the Allahabad high court on Monday, and was released last night itself from Dasna Jail.
"Yadav was released on Tuesday afternoon after her husband Mahender Singh Yadav submitted the bail papers to jail superintendent Veeresh Raj Sharma," officials said.
"She had spent her time teaching other jail inmates," the superintendent said.
The former UP chief secretary, who took voluntary retirement in 2007, had been found guilty of violating norms in allotting industrial land plots to Flex Industries, while she was the chief executive officer of Noida Authority in the 1990s.
The CBI special court had convicted the two under section 13 Prevention of Corruption Act and 120B (conspiracy) of the Indian Penal Code.
A 1971 batch IAS officer, Yadav was chief secretary during the chief ministership of Mulayam Singh Yadav. She had earned the dubious distinction of being the country's first IAS officer to be removed from the chief secretary's post by the Supreme Court on charges of corruption in 2005.
She was also tagged as one of the "most corrupt officers" in a poll held by UP IAS association in 1997.
Yadav was also brought to CBI court on Monday by jail authorities in connection with two more cases of alleged irregularities in allocating plots to her two daughters Sanskriti and Sukriti. She was asked to be present in court for hearing of the case on January 10 next year.