Pakistan-US ties could be affected if Islamabad does not act to rearrest and prosecute a mastermind of the deadly siege in India's Mumbai nearly a decade ago, the White House warned on Saturday.

The statement came three days after a Pakistani court ordered the release of Hafiz Saeed, who heads the UN-listed terrorist group Jamaat-ud-Dawa (JuD) and has a $10 million US bounty on his head.

Saeed's freedom came despite months of pressure by Washington on Islamabad over its alleged support for militants.

Freeing him "belies Pakistani claims that it will not provide sanctuary for terrorists," President Donald Trump's press secretary said in a statement.

"If Pakistan does not take action to lawfully detain Saeed and charge him for his crimes, its inaction will have repercussions for bilateral relations and for Pakistan’s global reputation," the statement said.

Saeed had been under house arrest since January following a government crackdown on JuD, but a spokesman for his party said authorities had failed to provide evidence.

Trump seeks "a constructive relationship with Pakistan, but expects decisive action against militant and terrorist groups on Pakistani soil that are a threat to the region," the White House said.

"The release of Saeed is a step in the wrong direction."

On Friday the US State Department expressed deep concern at Saeed's release and called for him to be arrested and charged.

Six Americans were among 166 people killed in 2008 during the three-day siege in Mumbai when gunmen who arrived by sea sparked battles with Indian commandos.

The drama, played out on live television around the world, nearly brought nuclear-armed enemies India and Pakistan to the brink of war.

JuD is considered by the US and India to be a front for Lashkar-e-Taiba (LeT), the militant group blamed for the attack on India's financial capital.

In October, US Secretary of State Rex Tillerson said Washington is concerned that extremist groups are threatening the "stability and security" of the Pakistani government.

Trump has accused Islamabad of harboring "agents of chaos" who could attack US-led NATO forces in Afghanistan.

Washington and Kabul have long accused Islamabad of supporting Afghan militants including the Taliban. They are believed to have links to Pakistan's shadowy military establishment.

Pakistan has repeatedly denied the charge.

Saeed's party says he has no links to terrorism, and his spokesman said he was placed under house arrest for talking about the rights of people in the disputed Kashmir region.

Source: AFP