The court set bail for Mr. Pistorius at $113,000 or one million rand and postponed his murder trial until June 4.
The decision by the judge, Desmond Nair, drew cheers from Pistorius' family and supporters at the Pretoria magistrate's court, although the athlete appeared unmoved as the decision was read out, following recent days when he appeared to weep.
[The Associated Press reports separately that today's court decision marked the first time that members of the Steenkamp family were present in judicial proceedings on Pistorius.]
Pistorius was ordered to hand over firearms and passports, avoid his home and all witnesses in the case, report to a police station twice a week and not to drink alcohol.
The decision followed a week of dramatic testimony about how the athlete shot dead his girlfriend Reeva Steenkamp at his luxury home near Pretoria in the early hours of Feb. 14, Valentine's Day.
Prosecutors said Pistorius, 26, committed premeditated murder when he fired four shots into a locked bathroom door, hitting his girlfriend cowering on the other side. Steenkamp, 29, suffered gunshot wounds to her head, hip and arm.
Pistorius' defense team argued the killing was a tragic mistake, saying the athlete had mistaken Steenkamp for an intruder. They said he was too famous to pose a flight risk and deserved bail to prepare for a case that has drawn worldwide attention.
"He can never go anywhere unnoticed," his lawyer Barry Roux told the court on Friday.
The 26-year-old Olympic and Paralympic star's lower legs were amputated in infancy and he has raced on carbon fiber blades, becoming a figure of world stature after the 2012 Summer Games in London.
The Olympic and Paralympic star faces life in prison if convicted of premeditated murder.
Prosecutors had portrayed him as a cold-blooded killer.
"You cannot put yourself in the deceased's position. It must have been terrifying. It was not one shot. It was four shots," prosecutor Gerrie Nel said on Friday.
Shots and screams
In an affidavit read out in court, Pistorius said he had been "deeply in love" with Steenkamp, and Roux said his client had no motive for the killing.
Pistorius contends he was acting in self-defense after mistaking Steenkamp for an intruder, and feeling vulnerable because he was unable to attach his prosthetic limbs in time to confront the perceived threat.
He said he grabbed a 9-mm pistol from under his bed and went into the bathroom. He said he fired into the locked door of the toilet, which adjoined the bathroom, in a blind panic in the mistaken belief the intruder was lurking inside.
Witnesses said they heard a gunshots and screams from the athlete's home on an upscale gated community near Pretoria. The community is surrounded by high stone walls and topped with an electric fence.
In a magazine interview a week before her death, published on Friday, Steenkamp, a law graduate and model, spoke about her three-month relationship with Pistorius.
"I absolutely adore Oscar. I respect and admire him so much," she told celebrity gossip magazine Heat. "I don't want anything to come in the way of his career."
Police pulled their lead detective off the case on Thursday after it was revealed he himself faces attempted murder charges for shooting at a minibus. He has been replaced by South Africa's top detective.
The arrest of Pistorius last week shocked those who had watched in awe last year as he reached the semi-final of the 400 meter race in the London Olympics.
The impact has been greatest in sports-mad South Africa, where Pistorius was seen as a rare hero who commanded respect from both black and white people, transcending the racial divides that persist 19 years after the end of apartheid.
(Editing by Andrew Roche)