The 24-year-old was sentenced to 10 months' imprisonment in June following an attack outside a nightclub in February, but the striker confirmed his exit on Twitter.
"Just to confirm to everybody I have been released from jail. Thanks for all your good and bad messages, will reply to as many as I can," he tweeted.
Meanwhile a statement from the club read: "Given the remorse demonstrated by Deeney, both in court and through his public apology, Watford is hopeful of reaching a resolution to support the player through his rehabilitation while he continues his playing career with the Hornets."
Deeney has scored 13 league goals in 79 games for Watford.