Šiško was brought in on Thursday on suspicion that by forming a para-military formation which he called the Štajerska Guard, he wanted to subvert the constitutional order.
Citing the risk of re-offence, the prosecution proposed that he be remanded in custody, but after hearing the suspect, the investigating judge found there was no ground for that.
The prosecution said that the case would now automatically be put before the pre-trial judging panel for re-examination.
Considering the size and complexity of the case, the panel was unofficially expected to take several days for deliberation.
However, the Maribor District Court explained that the panel needs to take its decision within 48 hours after the judge's decision, which means by Tuesday evening.
The criminal procedure act says that a panel's decision is needed whenever the investigating judge disagrees with the prosecutor's motion for custody.
If the panel remanded him in custody, Šiško would have a right to appeal to a higher court, but if the panel endorsed the judge's decision for his release, this decision would be final.
"The investigating judge's decision not to remand the suspect in custody does not affect the continuation of the procedure against the suspect, which for the time being remains in the domain of the prosecution. The latter may file an indictment against the suspect, regardless of the investigating judge's decision," the court said.
Instigation to subversion of the constitutional order is a charge that neither the prosecution nor the judge have dealt with before and there is no legal precedent.
Darko Simonič, the head of the Maribor district prosecution, said that the prosecution stood by the positions set out to the investigating judge, and could not yet speak about further moves.
The charge of instigation to subversion of the constitutional order carries up to 15 years in prison.
The head of the non-parliamentary party United Slovenia, Šiško and a second suspect were arrested after an organisation that called itself the Štajerska Guard posted pictures and videos of about sixty men in fatigues and wearing balaclavas, in what appeared to have been some kind of training.
Šiško, who calls himself the founder and leader of the guard, was seen carrying an assault rifle, and one man wielded a large axe.
Šiško is best known as a failed presidential candidate, but he has a history of run-ins with the law as a leader of the Maribor fan club Viole. He spent time in prison a decade ago due to attempted murder.