"Early this morning we were advised that the DPRK (North Korea) had released Alek from detention and he has now safely left the country," Scott Morrison said in Parliament, reported Efe news.
"Alek is safe and well," he added.
Sigley is now in China, NK News reported, and was expected to travel to Tokyo later Thursday.
There was speculation on Wednesday that meetings between Sweden's special envoy and high-ranking North Korean officials in Pyongyang may have been related to the 29-year-old Australian.
Morrison confirmed this on Thursday, saying Swedish authorities raised Sigley's disappearance on Australia's behalf, and expressed his "gratitude."
"This outcome demonstrates the value of the discreet behind-the scenes work of officials in resolving complex and sensitive consular cases in close partnership with other governments," he said.
Australia and North Korea maintain diplomatic relations but do not have embassies in their respective territories.
Sigley, who runs travel company Tongil Tours and is master's student in Korean literature at Kim Il-sung University in Pyongyang, went missing last week.
His family became concerned on June 27 after they were unable to contact him on Whatsapp, as was customary.
Sigley is usually active on Twitter where he has documented his life as a student in Pyongyang since late 2018.
His last tweet, dated June 24, was about the famous Ryugyong Hotel, a gigantic unfinished luxury complex that began to be constructed in Pyongyang in the late 1980s and of which Sigley took a few photos from the outside.
( With inputs from IANS )