A Croatian court had issued an international arrest warrant for Zoran Mamic, who failed to show up at a prison to serve a sentence for embezzling millions of euros.
Bosnian police have detained the former coach of Croatian football club Dinamo Zagreb on fraud charges.
Croatia had issued an international arrest warrant for Zoran Mamic when he failed to report to prison to begin serving a sentence for tax evasion.
Mamic had been sentenced to four years and eight months in prison in March by Croatia's high court.
The former coach - and his brother Zdravko who was handed a six-and-a-half-year sentence - had fled to neighbouring Bosnia following their convictions.
Both suspects were found guilty of embezzling over €14.5 million from the sale of Dinamo Zagreb players to foreign clubs and for tax evasion worth around €1.6 million.
The Croatian court ruled that they made fictitious deals during transfers of several former Dinamo players, including Luka Modric to Tottenham in 2008.
The Real Madrid midfielder and former Ballon d'Or winner was a key witness during the trial, testifying about his financial deals with the suspects.
The brothers both have denied any wrongdoing, saying that Modric and other prominent former Dinamo players should also be held legally accountable for the transfers that they negotiated.
On Wednesday, a court in Sarajevo released Zoran Mamic on the condition that he report to police once a week.
Reports say Mamic also had to hand over his passport and other personal documents to the authorities and was banned from leaving Bosnia.
The court earlier rejected the extradition of Zdravko Mamic when he was questioned after fleeing to Bosnia in 2018.
As citizens of both countries, the Mamic brothers are not subject to automatic extradition to Croatia.
Zoran Mamic resigned as Dinamo Zagreb's coach in March after the supreme court upheld the verdict. Zdravko Mamic had been Dinamo's executive director.