Described by former US president George W Bush as "one of the world's most lethal terrorists," Riduan Isamuddin, better known as Hambali, is accused of helping to plan the Bali nightclub attack that killed more than 200 people, including 88 Australians, and of financing the Jakarta Marriott Hotel bombing in 2003.
The former leader of the militant network Jemaah Islamiyah was arrested in 2003 in a US-led operation in Thailand before being transferred to Guantanamo Bay in 2006.
Senior minister for law and human rights Yusril Ihza Mahendra said the statute of limitations on Indonesia's cases against Hambali had expired.
"No matter what, Hambali is an Indonesian citizen. No matter how wrong he is ... we must care for him," Yusril said.
"Indonesian government is aware about the sensitivity of this matter and will act carefully," he added.
Hambali was also suspected by the US of involvement in plotting the September 11 attacks in the United States.
Indonesia had previously sought access to question Hambali but was denied contact with him.
It has not been formally disclosed whether Hambali has admitted to or denied involvement in the September 11, Bali and Jakarta attacks.
At its peak, JI was one of Asia's most feared extremist networks, with cells in Malaysia, Singapore and the Philippines, but its influence and support waned after a sustained crackdown by authorities and de-radicalisation programmes.
Senior JI members said in June the network was being disbanded and Indonesia is considering parole for two of its former leaders and amnesty for its jailed members.
Indonesia would discuss the plan to repatriate Hambali with the US government, Yusril said.
The US embassy in Jakarta did not immediately respond to a request for comment.
The US last year repatriated two Malaysian detainees from Guantanamo Bay who had pleaded guilty to offences that included murder in violation of laws on war.
