Still wearing his navy blue jail uniform, Dwight W. Watson was set free last night, nearly 16 months after driving his tractor onto the Mall and making a phony bomb threat in a protest that paralyzed parts of the District.

The North Carolina tobacco farmer, decried by federal prosecutors as a domestic terrorist after his 47-hour standoff with police, left the D.C. jail at 7:20 p.m., the beneficiary of a federal judge's decision Wednesday to sharply scale back a six-year prison term he rendered last week.

"Praise the Lord!" Watson said as he got into a car with his attorneys and flashed the peace sign as they drove past the media outside the Southeast Washington facility.

Watson would not speak to reporters last night, but A.J. Kramer, one of the two attorneys who picked him up from jail, said that the farmer expressed relief about being free and that he was remorseful about the ordeal.

"He said if he had to do it all over again, he would have never done it," Kramer said.

Watson's release came a few hours after a federal appellate court rejected the Justice Department's last-chance effort to keep him locked up. Federal prosecutors had been scrambling since U.S. District Judge Thomas Penfield Jackson cut Watson's sentence to 16 months. With credit for good behavior, Watson's sentence was up.

Prosecutors contended there was no reason for Jackson to act, arguing that the judge had misinterpreted a Supreme Court ruling issued June 24, a day after Watson's sentencing. Jackson said the decision, handed down in an unrelated case, convinced him that he had unjustly added time to Watson's sentence in a way the Constitution did not allow. Prosecutors wanted Watson to stay in jail while they appealed Jackson's ruling, but the appellate court turned them down.

"The stars must have aligned for Dwight," said A.J. Kramer, the federal public defender and Watson's defense attorney.

Watson, 51, drove his tractor into a pond on Constitution Gardens in March 2003, complaining about the plight of tobacco farmers through a bullhorn and threatening to detonate explosives. The incident forced road closures that tied up four downtown rush hours and led to the closing of some office buildings until Watson surrendered peacefully.

A jury convicted him in September of making threats and damaging federal parkland. Jackson agreed with prosecutors to add prison time to the normal sentencing range for those crimes -- 16 months -- for the havoc and fear Watson caused. Watson apologized to the court, saying that his actions were foolish. "It was not my intention to hurt anyone," he said.

The Supreme Court decision drastically altered Watson's fate. In a 5 to 4 ruling, the high court said that judges cannot increase sentences beyond statutory guidelines for factors not proved to a jury. Jackson had done that in sentencing Watson, adding time for the disruption he caused, as well as for lies he allegedly told the jury.

Prosecutors raced to the U.S. Court of Appeals. But a three-judge panel voted 2 to 1 that prosecutors had not met the standard for an emergency request to hold Watson in prison. That standard required prosecutors showing that they had a very strong chance of winning their appeal of the sentence, and that Watson's release would endanger the public.

The federal Bureau of Prisons commuted Watson's sentence yesterday morning, got word of the appellate decision in the afternoon and then sent to the D.C. jail the paperwork that set his release in motion.

The news thrilled Watson's family and friends in his home town of Whitakers who had shared his outrage about the decline of his family farm. Watson has not been home since March 16, 2003, when he hooked up a trailer carrying a jeep to the back of his tractor and set off for Washington. The standoff began the next day.

After confirming that his brother would be released yesterday, George Watson began driving toward the District from the family's North Carolina farm.

Last night, George Watson said he had spoken to his brother on the telephone after his release.

"I think my brother, due to unfortunate circumstances which were unbearable, decided -- because of the man he is -- to take the warrior mentality and stand up to what was wrong,'' George Watson said. He added that though he respected the judicial process, he understood the cause for which his brother was fighting.

Relatives began celebrating yesterday before they heard the news of the appellate court's decision, and gathered for a lively barbecue at the family farm. They brought Watson's mother from her rest home for the occasion.

Now they hope to celebrate with Watson himself.

"It's just an answered prayer for him to be released and I can't wait to shake his hands outside prison walls," said David Cox, a longtime friend of Watson's from North Carolina, who went to military school with him as a boy. "I can't tell you how many phone calls I received yesterday from people here saying, 'I heard this on the news -- is it true, is Dwight coming home?' "

Federal prosecutors were unusually mum about Watson's victory. The U.S. attorney's office in Washington referred questions to the Justice Department, which made the decision to go to the appellate court. Justice officials declined to say whether they would continue to try to appeal Watson's sentence.

In their appeal, Justice Department attorneys wrote that Watson was a domestic terrorist who was convicted of a serious crime and "is obviously a danger to the community."

"We have no comment on the case," Justice spokesman John Nowacki said. "None."

The Supreme Court ruling has already had an impact across the country, and legal specialists said that it could affect thousands of cases and drastically change sentencing procedures.

Yesterday morning, one of Jackson's colleagues on the bench followed his lead and shortened a sentence he handed down the previous week.

Judge John Bates said he was compelled to re-sentence Obafemi Orenuga, a former D.C. tax auditor convicted of taking bribes from companies in exchange for illegally reducing their corporate taxes. Last week, Bates gave Orenuga a 37-month prison sentence based on some facts that Bates decided alone. Yesterday, Bates told Orenuga that he would have to serve only 24 months.

Staff writer David Nakamura contributed to this report.

"Praise the Lord!" Dwight W. Watson said after being released from D.C. jail. A federal judge had decided to sharply scale back a six-year prison term.Watson, a North Carolina farmer, was decried by prosecutors as a domestic terrorist after his two-day standoff with police last year on the Mall.