Appearing outside her home in Rangoon, Ms Suu Kyi told thousands of jubilant supporters they had to "work in unison" to achieve their goals.
The Nobel Peace Prize winner has been detained for 15 of the past 21 years. It is not yet clear if any conditions have been placed on her release.
US President Barack Obama welcomed her release as "long overdue".
UN Secretary General Ban Ki-moon said Ms Suu Kyi was an "inspiration", and called on Burma to free all its remaining political prisoners.
The decision to free 65-year-old Ms Suu Kyi comes six days after the political party supported by the military government won the country's first election in 20 years. The ballot was widely condemned as a sham.
For more than 24 hours crowds of people had been waiting anxiously near Ms Suu Kyi's home and the headquarters of her now-disbanded National League for Democracy (NLD) party for news of her fate, according to BBC News.
Like South African leader Nelson Mandela, Aung San Suu Kyi has become an international symbol of peaceful resistance in the face of oppression.
In 1991, a year after her National League for Democracy won an overwhelming victory in an election the junta later nullified, she was awarded the Nobel Peace Prize.
Aung San Suu Kyi is the daughter of the country's independence hero, General Aung San.
He was assassinated during the transition period in July 1947, just six months before independence.
Suu Kyi was only two years old at the time.
Suu Kyi - Key Points
1989: Put under house arrest as Burma junta declares martial law
1990: NLD wins election; military disregards result
1991: Wins Nobel Peace Prize
1995: Released from house arrest, but movements restricted
2000-02: Second period of house arrest
May 2003: Detained after clash between NLD and junta forces
Sep 2003: Allowed home after medical treatment, but under effective house arrest
May 2007: House arrest is extended for another year
Sept 2007: First public appearance since 2003, greeting protesting Buddhist monks
May 2008: House arrest extended for another year
May 2009: Charged with breaking detention rules after an American swims to her compound
August 2009: Sentenced to 18 months further house arrest
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