The AFL great was released without charge after being arrested as part of an ongoing drug supply investigation.
It is understood the pair were staying at a Port Melbourne property owned by Thompson, which was raided by police last Friday.
A 31-year-old man from Lara, near Geelong, and a 28-year-old Port Melbourne man were remanded in custody after being charged with drug trafficking on Tuesday.
"The man has been released pending enquiries", a police statement said on Tuesday.
Mark "Bomber" Thompson's home was raided by police on Friday.
'Detectives from Southern Metro Divisional Response Unit and Geelong Divisional Response Unit executed a warrant at Port Melbourne on 5/1/18, ' the statement said.
A 22-year-old Mill Park woman was also arrested and charged with drug trafficking in connection with the investigation.
"Police. Don't move", officers shout as they surge through the door of the converted warehouse.
Seven reported Thompson arrived at his home on Monday afternoon, but quickly left after seeing the media scrum waiting outside.
He coached Geelong to two premierships before returning to the Bombers as an assistant coach.
Thompson, 54, led the Cats to premierships as coach in 2007 and 2009 and played in Essendon's 1984, 1985 and 1993 flags.
Thompson was fined $30,000 for his role, although he later filled in for Hird in 2014 while the Essendon coach served an AFL suspension.