Two American youths arrested four months ago over the killing of two Indian graduate students in Louisiana have been released, five days after a teenager was indicted by a grand jury in the murder case.

Casey Gathers and Michael Jermaine Lewis from Baton Rogue were two of the three men arrested in May over the killing of 31-year-old Chandrasekhar Reddy Komma and 33-year-old Kiran Kumar Allam at the Edward Gay Apartments on the Louisiana State University campus.

Their release on Monday came five days after an East Baton Rouge Parish grand jury indicted 19-year-old Devin Jamell Parker on two counts of second-degree murder in the December 13, 2007 deaths, local media reported on Tuesday.

The second-degree murder carries a mandatory sentence of life in prison.

Gathers (20), Lewis (19) and Parker were booked on May 22 on two counts each of first-degree murder. All three were ordered held without bond, The Advocate reported.

As per the law, the prosecutors had 120 days either to formally charge the men or let them be released from jail. State District Judge Chip Moore granted defence requests and ordered Gathers and Lewis released, the report said.

Prosecutor Steven Danielson, however, said that Gathers and Lewis are not off the hook.

"It does not prohibit us from instituting prosecution down the road," he was quoted as saying, "They're not out of the woods by any stretch."

Komma, a biology student from Kurnool in Andhra Pradesh, and Allam, a chemistry student from the state capital Hyderabad, were found dead inside Allam's apartment. Both men were shot in the head and one was bound, officials investigating the case said.