The Al Khaliq bulk carrier was hijacked on October 22 around 180 nautical miles from Seychelles in the Indian Ocean.
The European Union naval mission in the region confirmed that the vessel had been release after a ransom was paid, and that its help had not been requested. No further details were provided.
"The ship is still here but the pirates have already deserted it and have come back to shore with their ransom money," said Ilkase, speaking from the main pirate lair of Harardhere, north of the capital Mogadishu.
Other sources confirmed that the ship was free.
"The pirates released this ship they had been holding near Harardhere. I heard they took more than three million dollars in ransom," said Moalim Abdullahi Diriye, a local elder.
A fisherman said he saw some of the pirates returning ashore from the ship with bags of cash.
"The pirates had been holding that ship near Hundule and I saw them coming ashore, they were carrying bags of money in their speedboats," said Hussein Shugle.
The Al Khaliq's crew consists of 24 Indians and two Burmese nationals.
The release of the 22,000-tonne bulk carrier reduces to 11 the number of foreign vessels still held by Somali pirates, together with more than 200 crew members.
The vessel -- seized within hours of the capture of British couple Paul and Rachel Chandler -- was one of the longest-running hijacking cases.
The only remaining vessel to have been held longer is the FV Win Far 161, a Taiwanese fishing vessel which has a crew of 30 from various Asian nationalities and was seized in April last year.
The town of Harardhere is currently awash with cash following the release of several ships in exchange for large ransoms, including seven million dollars air-dropped to free a 330-metre-long Greek supertanker last month.
According to some studies, Somalia's rag-tag army of sea bandits raked in at least 60 million dollars in ransom payments in 2009.