Also known as Naxals, the rebels have fought for decades in a swathe of central and eastern India, including many resource-rich regions, where tension runs high between poor farmers and industrial developers.
Television footage showed Bosusco, in a pink T-shirt and beige trousers torn at the knees, carrying a black rucksack on his shoulders as he walked through villages. He later arrived in Bhubaneshwar.
In response to rebel demands, the authorities freed a Maoist leader's wife from prison and promised to facilitate the release of several imprisoned rebels and their supporters.
However, Jhina Hikaka, a state legislator, who was kidnapped On March 24 by another another group of Maoists, was not freed.
Bosusco was handed to a mediator who had travelled to a remote camp where he was being held late on Wednesday. The Italian Foreign Ministry said Indian authorities had informed the ambassador of the release.