Five men, convicted over a 2003 raid on an Indonesian military weapons arsenal, will walk free from Abepura prison near Papua’s provincial capital of Jayapura, after being granted clemency by Widodo while he was in the province.
Separatists in Papua have for decades fought a low-level insurgency against the central government.
Dozens remain imprisoned for acts of treason that include raising the separatist Morning Star flag and taking part in anti-government protests.
Widodo shook hands with the five ethnic Melanesian prisoners at Abepura, presenting each with a letter confirming the remainder of their sentences had been waived.
“Today we are releasing these five detainees to stop the stigma of conflict in Papua,” he told reporters at the prison.
“We need to create a sense of peace in Papua. This is just the beginning.”
Widodo also announced decades-long reporting restrictions for foreign journalists in Papua would be lifted.
He revealed in an interview with reporters that from Sunday, foreign journalists would be allowed full access.
Foreign journalists typically face a lengthy process to obtain permission to report in Papua and requests are often turned down.
Authorities take a hard line on those caught reporting illegally. Two French journalists were handed short jail terms last year after being arrested while making a documentary on the separatist movement without permission.
The prisoner release marks a change in approach from previous governments.
During the 10-year rule of former president Susilo Bambang Yudhoyono, only one political prisoner in Papua was granted clemency, according to Human Rights Watch.
Widodo, who took office in October, has pledged to improve livelihoods in Papua, which remains deeply poor and underdeveloped compared to other parts of Indonesia despite its abundant natural resources.
However activists said releasing a handful of prisoners was not enough, and accused Widodo of seeking to “burnish his image”.
The president has faced a storm of international outrage since putting to death seven foreigners last week, with Australia withdrawing its ambassador over the execution of Bali Nine pair Andrew Chan and Myuran Sukumaran and the United Nations expressing deep regret.
Human Rights Watch Indonesia researcher Andreas Harsono said the move was “more like image-making”.
“It’s a good step but it’s nothing new,” he said.
He called on Widodo to go further by granting prisoners an amnesty.
Amnesty can be granted without prisoners having to admit guilt, unlike clemency, which requires prisoners to admit guilt before being granted.
Some prisoners in Papua have repeatedly refused to seek clemency when invited to do so by the government.
There are still regular flare-ups of violence in Papua, where poorly-armed insurgents are fighting on behalf of the mostly ethnic Melanesian population.
Indonesian troops are regularly accused of abusing Papuan villagers in the name of anti-rebel operations, but Jakarta denies allegations of systematic human rights abuses.
Jakarta took control of Papua, which forms half of the island of New Guinea, in 1963 from former colonial power the Netherlands.