Political rivals Taiwan and China had exchanged jailed spies as part of a goodwill gesture leading to the historic meeting of their leaders in Singapore earlier last month.
Two of Taiwan's military intelligence officers captured by China were released on Oct 13, while a Chinese spy was given advance parole.
This is the first such swop by both sides, and represents what analysts call a symbolic step to create "a friendly atmosphere" for the Nov 7 summit between Taiwanese President Ma Ying-jeou and Chinese President Xi Jinping.
The exchange was reported by Taiwanese newspaper China Times yesterday and confirmed by the island's government.
"This is based on a mutual goodwill gesture delivered by the Ma-Xi meeting," said presidential spokesman Charles Chen. "President Ma hopes cross-strait mutual exchanges can continue and make more concrete achievements in the future."
The pair released by China are Taiwan's highest-ranking spies caught - Colonel Zhu Gongxun and Colonel Xu Changguo of Taiwan's Military Intelligence who were captured in Vietnam in 2006 - while Taiwan released Chinese spy Li Zhihao.
The China Times reported that one more spy from China may be released but added that Taiwan would not be willing to let go of the one that China wants most - Taiwanese general Lo Hsieh-che, who was sentenced to life imprisonment after he was found leaking intelligence to the other side.
The exchange of prisoners, suggested the newspaper, is a necessary first step to building "military trust" on both sides and eventually the dismantling of the more than 1,000 Chinese missiles aimed at Taiwan.
During the leaders' summit, Mr Ma had asked that China remove the missiles; in response, Mr Xi said they are not aimed at Taiwan.
Espionage - to recruit sources and gather intelligence - has long been part of the cross-strait set-up, with both sides remaining formally at war although the civil war to all intents and purposes ended in 1949. China has never renounced the use of force against Taiwan.
Despite warming relations under Mr Ma, reports are that such covert activities remain unabated and even escalate as exchanges between the two sides increase. Hundreds of Taiwanese spies remain in Chinese jails, said China Times.
With an eye on the upcoming presidential election on Jan 16 where the pro-independence Democratic Progressive Party's chairman Tsai Ing-wen is expected to triumph, it added: "This is the best moment (to secure the release of prisoners). And also, perhaps the last."
Professor Chao Chien-min, who during Mr Ma's first presidential term was the No. 2 at Taiwan's Mainland Affairs Council overseeing cross-strait relations, calls it a symbolic move that reveals China's willingness to engage the ruling Kuomintang (KMT). "It is part of a positive spin on relations, which is good for both sides," he said.
But he is doubtful if it will have any impact on the election. "I don't think this is part of the calculations. Experience has shown that it is difficult for China to interfere in the elections."
Hard work remains to be done to substantively improve cross-strait ties, he added. Efforts to establish representative offices on both sides and to implement the trade in services pact have yet to bear fruit, he noted.