The fishermen, who had been detained for between one and three years will travel from Karachi to the eastern city of Lahore, where the two neighbours and arch-rivals have their only active border crossing.
The move came a day after the South Asian association for regional co-operation (Saarc) summit in Nepal ended in disappointment, overshadowed by India and Pakistan's rivalry.
"Pakistan is releasing 40 Indian prisoners [5 civilians and 35 fishermen] tomorrow. With this, [the] number of Indian prisoners released this year will be 191", the main foreign ministry spokeswoman said via a recognised Twitter account.
A week ago Pakistan detained 60 Indian fishermen for straying into its waters.
Such arrests are frequently carried out by both countries, as the maritime border in the Arabian Sea is poorly defined and many fishing boats lack the technology needed to be certain of their precise location.
The fishermen often languish in jail even after serving their term, as poor diplomatic ties between the two arch-rivals mean fulfilling official requirements can take a long time.
The superintendent of Malir district jail in Karachi, where the fishermen were held Muhammad Hassan Sehto said 424 Indians nationals including 419 fishermen are still in custody.
Relations between nuclear-armed India and Pakistan have taken a turn for the worse in recent months, with some of the worst shelling in years along the Kashmir disputed border.