REBELS released the Guatemalan ambassador from the Japanese embassy residence in Lima yesterday, leaving 103 captives inside.
Mr Jose Maria Argueta, who appeared to be in good health, walked out of the residence compound with the official mediator, Mr Michel Minnig of the Red Cross. He told reporters that his release was related to the peace accord his government was due to sign yesterday with left-wing rebels after 36 years of civil war.
Mr Argueta, wearing a blue suit and carrying a plastic bag, said rebels freed him "in recognition of the peace process in Guatemala, whereby peace has been secured", ending Latin America's longest insurgency.
Under the accord, members of the rebel Guatemalan National Revolutionary Unity movement will return to normal political life.
Earlier, a pre-dawn explosion which rocked the residence was attributed to a domestic pet - probably a cat - detonating one of the landmines set by the rebels of the Tupac Amaru Revolutionary Movement. No one was injured.
Security, which appeared to have become more relaxed over the past few days, was immediately redoubled. Earlier the rebels freed an ailing Japanese diplomat - who became the 579th captive to be released since the drama began.
Another of the freed hostages, the former Peruvian independent presidential candidate, Mr Alejandro Toledo, said the rebels were considering seeking political asylum in Denmark or Sweden.
Havana has also been mentioned as a possible destination. But another freed hostage, a left-wing congressman, Mr Javier Diaz Canseco, said he did not believe Cuba would be prepared "to pay the enormous political price" of taking in the guerrillas.
On Wednesday, the first secretary of the Japanese embassy, Mr Kenji Hirata (34), was pushed out of the residence in a wheelchair, accompanied by Red Cross officials and a Catholic bishop who spent more than seven hours inside the ambassador's home.
Bishop Juan Luis Cipriani, of the province of Ayacucho and a close friend of Mr Fujimori, entered the compound early on Christmas Day along with the official mediator, Mr Michel Minnig of the International Committee of the Red Cross. He said a Christmas Day Mass for the hostages but the duration of his visit suggested a possible role in negotiations.