Trump reportedly said he had decided to grant clemency to Bannon, who faces a federal case over defrauding donors, after much deliberation.
"President Trump granted a full pardon to Stephen Bannon. Prosecutors pursued Mr. Bannon with charges related to fraud stemming from his involvement in a political project," the statement from White House press secretary Kayleigh McEnany read. "Mr. Bannon has been an important leader in the conservative movement and is known for his political acumen."
In August, New York federal prosecutors charged Bannon and three others with swindling the president’s own supporters as part of a fundraising campaign purportedly aimed at supporting Trump's US-Mexico border wall. Bannon, however, has pleaded not guilty.
The move comes as Trump and Bannon have lately rekindled their relationship as the president sought support for his claims of voter fraud in the November election, an official familiar with the situation told Reuters.
White House officials had, however, advised the president against the pardon over concerns that there is a possible connection between Bannon and the violent protests by Trump supporters at the US Capitol earlier this month, a source familiar with the discussions told CNN.
"All hell is going to break loose tomorrow," Bannon, 67, promised listeners of his podcast -- "War Room" -- on January 5, the day before the violence.
Trump also pardoned Elliott Broidy, a former top fundraiser for him who pleaded guilty in 2020 to breaking foreign lobbying laws, and former Detroit Mayor Kwame Kilpatrick, who had received a 28-year prison term on corruption charges.
Rappers Lil Wayne and Kodak Black who were prosecuted on federal weapons offenses, are two other people Trump pardoned.