An event was held at the Welikada prison to free the inmates 736 males and 26 females in the presence of the President, the Justice Ministry was cited as saying by the Colombo Gazette.
All those freed were in jail for minor offences and did not include convicts jailed for rape, child abuse, heroin use and drug trafficking.
Sri Lanka has declared a two-day holiday to mark Vesak, or the commemoration of the birth, enlightenment and passing away of Gautam Buddha. The celebrations, however, have been minimized following the Easter terror attacks which killed over 250 people and injured hundreds.
In a statement, Sirisena called on all the citizens to remain united and work towards a society that is safe and secure.
He said all citizens must recollect the teachings of Lord Buddha to build a society with boundless peace by avoiding all attempts to destroy each other for the greed for power.
"For a society to blossom without fear, danger and mistrust, the Buddha has preached. Hatred will not heal hatred but kindness will heal hatred. It is time we became strong enough to truly, meaningfully and honestly relate this eternal truth," Sirisena said.
Sri Lanka has witnessed a spate of attacks on Muslim-owned homes and shops as well as mosques following the April 21 attacks by Islamist militants on three churches, three luxury hotels and two other locations. The carnage was claimed by the Islamic State terror group.
Prime Minister Ranil Wickremesinghe said the Vesak full moon appeared in the skies as the dark clouds of terror cast a shadow over the nation.
"There is a sense of anxiety and grief throughout society. In such troubling times, the sublime teachings of the Buddha show us the way to unite spiritually and find common purpose in our humanity," he said.
Former President Mahinda Rajapaksa said: "May all forces of darkness, ignorance, bigotry and hatred towards others be defeated in this Vesak.
"This Vesak may herald an era of contentment, peace and evocation. Not just a negative notion of peace defined by the absence of conflict. But a positive peace where we all work to promote dialogue, harmony and justice," he added.