The Georgian parliament has approved the release of around 3,000 prisoners and shorter terms for thousands more.
Georgia's previous government - backed by President Mikheil Saakashvili - was hit by a scandal over prisoner abuse.
The new government of Prime Minister Bidzina Ivanishvili, a political opponent of the president, says many inmates were imprisoned unfairly.
But Mr Saakashvili called the amnesty a "mass release of criminals", and warned of grave consequences.
The first prisoners are expected to be released later on Sunday.
The BBC's Damien McGuinness in Tbilisi says some Georgians fear the move could mark a return to the crime-ridden 1990s.
Many Georgians worry that powerful mafia bosses, who fled the country while the last government was in power, will come back if they think this new administration is soft on crime, our correspondent says.
Georgia has one of the highest incarceration rates in the world, but there are accusations that over the years zero-tolerance to crime tipped over into heavy-handed behaviour, he adds.
Before October's election, videos broadcast on national television showed prison inmates being beaten and sexually abused by guards.
The scandal sparked street protests and allowed the then-opposition leader Mr Ivanishvili to portray the government as high-handed.
Recently there has been tension between the government of Mr Ivanishvili and Mr Saakashvili, who is meant to stay in office until presidential elections later on this year.
Mr Saakashvili complained last month that members of his party were being victimised when several ministers under the previous government were arrested on suspicion of various offences.
However, the new administration says it is simply trying to address abuses of power committed under the previous government.