The 19-year-old man had been arrested by police on Thursday, on suspicion of the rape of a 17-year-old girl in Craven Arms.
It came after reports of an attack on the girl at around 1.45am on the same day.
Police said the girl had been attacked while walking through an alley near Craven Arms Railway Station, after getting off a train.
Now they have confirmed that the man has been released on bail, while officers continue investigating.
Anyone with information about the incident can police on 101 or Crimestoppers anonymously on 0800 555111.