The plan is similar to what other states and some Pennsylvania counties have undertaken or considered, and it comes after talks broke down with Republican lawmakers who hold a majority in the state Legislature.
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Wolf's office said releasing inmates will save lives, help stop the spread of the virus and avoid overwhelming Pennsylvania's already-burdened health care system.
"We can reduce our non-violent prison population and leave fewer inmates at risk for contracting COVID-19 while maintaining public safety with this program," Wolf, a Democrat, said in a statement.
The state's district attorneys association is backing the move, although a Huntingdon County judge questioned Wolf's legal authority. Some prisoner rights advocates say Wolf's order doesn't go far enough, while the corrections officers' union criticized Wolf's move as "haphazard" and said there aren't enough parole agents to handle releases under normal conditions, let alone this situation.
The releases, to halfway houses or home confinement, could start as early as Tuesday, according to the governor's office.
The plan allows the release of inmates serving time for nonviolent offenses who are within nine months of scheduled release, or within 12 months for those considered at heightened risk from the virus.
The temporary reprieve does not apply to inmates incarcerated for certain crimes, including violent crimes, crimes committed with a firearm, drug trafficking and sexual offenses. And it does not apply to inmates who have been denied parole or convicted of any offense while incarcerated.
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Pennsylvania's state prisons hold about 44,000 inmates. The Wolf administration said approximately 1,500 to 1,800 inmates are eligible, although some may not be able to be released because of challenges involving housing, health care or behavioral health treatment.
House Republican leaders had sought to cap any release of inmates at 450.
Wolf's executive order said the Department of Corrections will discuss each eligible inmate with the courts and prosecutors.
Inmates given reprieve are to be monitored similarly to parolees and supervised by parole agents, the administration said. They would return to prison to complete any remaining portion of their sentences when the order expires, it said.
The Wolf administration has disclosed that 11 inmates at Phoenix state prison, in Montgomery County, have contracted the virus.
The prison system has been on inmate quarantine since March 29, with inmates being fed in their cells and all movement being controlled to achieve social distancing.