The news was announced by the Italian Prime Minister, Romano Prodi, and coincides with the 87th birthday of Father Bossi's mother.
Fourteen government soldiers were killed last week as they searched for the priest.
The Philippine army blamed their deaths on Islamists linked to al-Qaeda.
Father Bossi, who plans to meet with his parishioners before heading back to Italy to see his family, said his captors treated him "with respect."
"I never had the sensation that they wanted to kill me, nor did I ever receive a death threat or violence of any kind," Father Bossi told the Misna missionary news agency.
"Only the food wasn't great - rice, salt and dried fish. As a result I lost some weight. But I also stopped smoking; I haven't touched a cigarette since 27 June," he added.
Chief Superintendent Jaime Caringal, a regional police commander, said Father Bossi's release was the result of negotiations with the kidnappers, who he did not identify.
Ties with al-Qaeda
The Philippine military has said it believes rogue members of the Moro Islamic Liberation Front (MILF), the main Muslim separatist group in the southern Philippines, to be behind the kidnapping.
Last week, Philippines marines searching for Father Bossi were ambushed and 14 of them were killed.
A close adviser to President Gloria Arroyo suggested that Abu Sayyaf, an Islamic extremist group known to have ties with al-Qaeda, might be responsible.
Superintendent Caringal said no ransom was paid and that Father Bossi was freed peacefully.
The priest was seized by armed men near the coastal village of Bulawan near Zamboanga on 10 June. -BBC
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