The 22-year-old has been eligible for parole since last December following a high court ruling on his case.
Mr Shields was convicted in 2005 of the attempted murder of a barman in Bulgaria during celebrations after Liverpool Football Club's Champions League win in Istanbul.
Since being arrested at the Black Sea resort four years ago Mr Shields has maintained his innocence; a stance seemingly justified by another British football fan confessing to the attack upon barman Martin Georgiev on May 30th.
But he was not prepared to return to Bulgaria to face possible prosecution, leaving Mr Shields to be convicted and initially jailed for 15 years.
That sentence was reduced to ten on appeal, while he returned to the UK in 2006 to serve the remainder of his sentence.
Earlier this year justice secretary Jack Straw said he was not convinced Mr Shields was 'morally and technically' innocent.
But after receiving new evidence of his innocence, he was today granted a pardon, Mr Shields' solicitor John Weate said: 'I have spoken to Michael and he has been told the Jack Straw has granted a royal pardon.
'He was informed of the decision by the governor this morning. He was ecstatic and I'm delighted that an innocent man is finally being freed.'
According to the Liverpool Echo, Mr Shields has spent 1,563 days in custody.
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