Secretary of State Rex Tillerson announced Warmbier's release on Tuesday morning, but did not discuss the student's medical condition.
"At the direction of the President, the Department of State has secured the release of Otto Warmbier from North Korea," he said in a statement. "Mr Warmbier is en route to the US where he will be reunited with his family."
Secretary Tillerson informed President Donald Trump by phone, with an anonymous senior administration official telling The Washington Post the president's last instruction was: "Take care of Otto."
North Korea announced Mr Warmbier's arrest in late January 2016, saying he committed an anti-state crime with "the tacit connivance of the US government and under its manipulation."
Warmbier had been staying at the Yanggakdo International Hotel. It is common for sections of tourist hotels to be reserved for North Korean staff and off-limits to foreigners.
In a tearful statement made before his trial, Mr Warmbier told a gathering of reporters in Pyongyang he was offered a used car worth $US10,000 ($13,200) if he could get a propaganda banner and was also told that if he was detained and didn't return, $US200,000 ($265,000) would be paid to his mother in the form of a charitable donation.
Warmbier said he accepted the offer because his family was "suffering from very severe financial difficulties."
Warmbier also said he had been encouraged by the university's Z Society, which he said he was trying to join. The magazine of the university's alumni association describes the Z Society as a "semi-secret ring society" founded in 1892 that conducts philanthropy, puts on honorary dinners and grants academic awards.
The announcement comes as former NBA player Dennis Rodman paid a return visit to the rogue nation.
It was not immediately clear if Rodman's visit was purely coincidental with Mr Warmbier's release.
Rodman has travelled to the isolated nation four times previously and is one of few people to have met both North Korean leader Kim Jong-un and President Trump.
Speaking to reporters in Beijing before his arrival in Pyongyang on Tuesday, he said that the issue of several Americans detained by North Korea is "not my purpose right now.
Secretary Tillerson also said in his statement on Tuesday the State Department was still discussing three other detained Americans with North Korea.
- news.com.au