Supporters chanted "Prime Minister Nawaz Sharif!" outside the court after the decision was announced.
The Islamabad High Court, hearing a petition from Mr. Sharif's lawyers, said Wednesday he should be set free on bail pending his appeal, according to the court order.
The ruling comes nearly two months after Sharif's party lost a general election to the party of new Prime Minister Imran Khan.
The three are serving 10-, seven- and one-year prison sentences, respectively. However, all three were also ordered to submit bail bonds of Rs 0.5 million each.
During the hearing, Justice Miangul Minhalla said prosecutors had failed to bring any evidence of Nawaz Sharif's ownership of the Avenfield apartments, the four luxury flats in Park Lane, central London, at the heart of the case, and wanted the court to keep him jailed "on mere presumption".
Nawaz Sharif, Maryam Nawaz and her husband Captain (retd) Safdar, were convicted by an accountability court in the Avenfield reference case on July 6.
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The ruling by the Islamabad High Court comes just a week after Sharif's wife, Kulsoom Nawaz, died from cancer in London.
Sharif has repeatedly called the cases against him politically motivated, suggesting collusion between the powerful military and courts to destabilize his Pakistan Muslim League-Nawaz party and throw him out of power. The charges stemmed from leaked papers from a Panama law firm.
In opposition, Khan was a vocal supporter of the legal cases that removed Sharif from office. Sharif's party and others allege the July 25 polls were rigged to favor Khan, who is seen to be close to the army.
"If the court finally quashes Sharif's conviction, that will be a cause of concern for the new government", said Tauseef Ahmed, adding that "Sharif is still a popular leader and has the capability to mobilize masses".
Pakistani media reported that the verdict would remain a temporary relief for the former prime minister and his family members until the court gives the final decision on their application seeking suspension of their conviction in the Avenfield case.
He was expelled from office in 1993 on suspicion of corruption.