Counter terrorism officers raided an address in Kelham Island and also a property in Huddersfield on June 1 with two men, aged 24 and 29, arrested.
A spokeswoman for the North East Counter Terrorism Unit said that the 29-year-old had been released in Manchester on Monday afternoon while the 24-year-old remains in custody.
It is not clear which of the two men - both from Huddersfield - was the one arrested in Sheffield.
The men were detained on suspicion of offences under Section 5 of the Terrorism Act and the pair have been in custody since June 1.
At the time of the arrest a spokeswoman said the arrests were not connected to the Manchester Arena attack which killed 22 people and injured more than 60 others.
A 23-year-old Sheffield man arrested by counter-terrorism officers on suspicion of assisting an offender was released under investigation earlier in the inquiry.