The decision to send Imamoglu, Erdogan's main political rival, to prison comes after the main opposition party, European leaders and tens of thousands of protesters criticised the actions against him as politicised and undemocratic.
The court said on Sunday Imamoglu, 54, and at least 20 others were jailed as part of a corruption investigation, one of two that were opened against him last week.
The court decided to release the mayor under judicial control measures over a separate terror-related charge, broadcasters Halk TV and AHaber reported, potentially blocking the government from appointing a trustee to run the country's largest city.
Imamoglu, who leads Erdogan in some polls, has denied the charges, calling them "unimaginable accusations and slanders".
Also on Sunday, members of is Republican People's Party (CHP), the main opposition against Erdogan's ruling alliance, and others were voting to select Imamoglu as the party's candidate for the next presidential election.
No general election is scheduled until 2028 but if Erdogan, who has led Turkey for 22 years, is to run again, parliament would need to back an earlier election since the president will have reached his limit by that date.
Ankara Mayor Mansur Yavas, a member of the Republican People's Party, told reporters on Sunday jailing Imamoglu was a disgrace for the judicial system.
The government denies that investigations are politically motivated and says courts are independent.Â
It has warned against protests, especially given a nationwide ban on street gatherings that was extended on Saturday for four more days.
On Saturday, thousands gathered outside the Istanbul municipality building and the main courthouse, with hundreds of police stationed at both locations using tear gas and pepper spray pellets to disperse protesters, as the crowd hurled firecrackers and other objects at them.
Though most demonstrations have been peaceful, protesters also clashed with police in the western coastal province of Izmir and the capital Ankara for a third night in a row, with police firing at crowds with water cannons.
Turkish authorities have detained 323 people during protests over the investigation, Interior Minister Ali Yerlikaya said early on Sunday.
