Trump says he asked lawyers whether there was anything that could be done to block Lindh's release but was told that "from a legal standpoint, there's nothing we're allowed to do".
John Lindh, 38, was released Thursday from the federal prison in Terre Haute, Indiana, according to the federal Bureau of Prisons.
The then-20-year-old revealed his true identity to two Central Intelligence Agency officers, one of whom, Johnny Spann, was killed in a prisoner revolt hours after he interrogated Lindh.
He noted that numerous other Taliban fighters who were sent to Guantanamo as enemy combatants were released much earlier.
The conditions of Lindh's release include a demand that he go through mental health counseling, that he not communicate or espouse extremist views and there are several restrictions related to his internet use - including a stipulation that he can only communicate online in English.
The memo begins, "We assess that some of the more than 90 homegrown violent extremists (HVEs) incarcerated in the USA who are due to be released in the next five years will probably reengage in terrorist activity, possibly including attack plotting, because they either remain radicalized or are susceptible to re-radicalization".
'Lindh was in Afghanistan training with al Qaeda while the September 11 attacks were planned, and he was there fighting with them after the attacks were carried out. Spann was the first American killed in the Afghan war. But he admitted carrying an assault rifle and two grenades.
When Lindh was captured in Afghanistan in 2001, he told USA forces why he chose to join the Taliban, saying, "my heart became attached to them".
Mr Spann's daughter Alison Spann, now a journalist in MS, posted a letter on Twitter that she said she had sent to Mr Trump.
"To that end, we must consider the security and safety implications for our citizens and communities who will receive individuals like John Walker Lindh, who continue to openly call for extremist violence".
And last week, Senators Richard Shelby and Maggie Hassan demanded the prison bureau explain how it would mitigate the potential threat of scores of "terrorist offenders" to be released in the coming years. A second lawsuit reversed a policy requiring strip searches for inmates receiving visitors, and a third won the right to wear prison trousers above the ankle, which Lindh said is in accordance with Islamic principles.
US-born John Walker Lindh (L) is led away by a Northern Alliance soldier after he was captured among al Qaeda and Taliban prisoners following an uprising at the Fort Qali-i-Janghi prison near Mazar-i-Sharif on December 1, 2001.
On Wednesday, Florida Republican Rep. Michael Waltz, a former Green Beret who served in Afghanistan, described him as a "traitor" and said he "should be in prison for life".