"This was a very important and necessary step for both of our countries to be able to maintain our relationship and remain focused on progress on bedrock national interests," the senator said in a statement.
A court in Lahore first charged Davis for killing two Pakistanis on January 27 and then acquitted him when the family of the victims said they had no objection to his release after the compensation arrangement. Kerry said he was deeply grateful for the Pakistani decision.
"As I said last month in my visits to Lahore and Islamabad, we deeply regret the loss of life that led to this difficulty in our relationship and the demonstrations on Pakistan's streets, but neither country could afford for this tragedy to derail our vital relationship.
"We look forward to working with Pakistan to strengthen our relationship and confront our common challenges," added the senator, who visited Pakistan in the days following the shooting in a bid to calm rising tensions.