The controversial Blancos stopper has been discharged from medical care following overnight checks on a head injury sustained during Sunday's draw with Valencia
The Portuguese was substituted at half-time in the 1-1 draw with Valencia after Casillas came to clear a corner and collided with the defender, leading to the away side's equaliser.
Real Madrid had issued a medical report on their website where they confirmed that the player remained hospitalised overnight with a head injury, but he has since been discharged following further tests.
"Pepe entered University La Paz Hospital on Sunday after a head injury that left the player in a confused state," the statement read. "He was sedated and a scan was carried out without significant findings. The player has remained stable with a good level of awareness."
Following the game, Barcelona defender Gerard Pique took to Twitter to show his support for Pepe.
"I just saw the images on TV", he tweeted. "They are chilling. Hopefully it's nothing serious and that you will play soon! #BestwishesPepe."
While the news of Pepe's release is a relief for Madrid, it is unclear how long the defender will remain out of action.
Real Madrid play Barcelona in the first leg of the Spanish Super Cup on Thursday night.