Jean-Claude Romand killed his parents, wife and two children in 1993 as they were about to learn about his double life.
Romand had spent nearly 20 years pretending he was a successful doctor and researcher working for the Geneva-based World Health Organization.
“Parole has been granted,” his lawyer Jean-Louis Abad told AFP. “His release is imminent but without doubt will not be today.”
French prosecutors confirmed the ruling by an appeals court in Bourges in central France, saying he should be out by June 28.
Romand, now 65, will be under electronic surveillance for two years and must live in an area approved by the judiciary.
But a lawyer for the family of Romand's murdered wife Florence said it was a very difficult time for the relatives.
“It is a huge disappointment for my clients and a cause of great pain. They feel that everything is over for Mr Romand but it will never end for them,” said Laure Moureu.
Sentenced to life in jail in 1996, Romand has been eligible for release since 2015.
His case has been the subject of fascination in France, notably inspiring the book “L'adversaire” (The Adversary) by Emmanuel Carrere which was made into a film in 2002 by Nicole Garcia starring prominent French actor Daniel Auteuil.
The case also inspired the 2001 film “L'emploi du temps” by French director Laurent Cantet, which was very well received.
Romand hid his failure to qualify as a doctor from his family and instead claimed to be a high-ranking WHO researcher.
Threatened with exposure as creditors closed in, Romand, then aged 38, carried out the killings on January 9, 1993.
He murdered his wife with a rolling pin and then shot dead his daughter and son aged 7 and 5, before killing his parents.
He then went home and took barbiturates, setting his house on fire. But he was found alive, though unconscious, by the fire brigade.