A presidential spokesman said Mohammed Fahmy, a Canadian, and Baher Mohamed, an Egyptian, were on a list of 100 prisoners to be released later.
State media said a third person from the case was also pardoned. It is not clear if this is the Australian Peter Greste, who was deported in February.
They were sentenced to three years in prison last month after a retrial.
Prosecutors accused them of collaborating with the outlawed Muslim Brotherhood after the overthrow of President Mohammed Morsi by the military in 2013.
The journalists denied the allegation and said they were simply reporting the news. Legal experts said the charges were unfounded and politically motivated.
‘Long nightmare ends’
Fahmy and Mohamed were named on a presidential decree pardoning “100 young people trapped in issues related to the breach of the law on demonstrations and some humanitarian and health cases”.
Also included were the civil rights campaigners Yara Sallam and Sanaa Seif, who were sentenced to two years in prison in 2014 for taking part in an “illegal protest” demanding the release of detainees and repeal of the law on demonstrations.
Soon after Fahmy’s pardon was reported, a tweet from his account said: “Thank you to all the supporters sending us the news, we have heard and are very happy. AJ Staff is Free!”
His brother, Adel, told the BBC by telephone from Kuwait: “It’s such a relief to have this long nightmare end.
“We’re just so happy that this is all corrected and the truth has prevailed. He was always innocent.”
The pardons were issued by Mr Sisi ahead of the Islamic festival of Eid al-Adha and a day before he travels to New York to address the UN General Assembly.
The president had said he would be willing to pardon the Al Jazeera journalists once the judicial process had ended.
Hopes for their release had also been boosted by improved relations between Egypt and Qatar, which owns Al Jazeera.
Fahmy, who renounced his Egyptian citizenship to qualify for deportation in February, is expected to leave for Canada once he is released.
The journalists’ first trial, at which they were sentenced to between seven and 10 years in prison, was widely condemned and Egypt’s Court of Cassation ordered a retrial after ruling that the original court had been “hasty in pronouncing its verdict”.