The UN-backed tribunal said on Thursday it was releasing the 80-year-old, saying she was unfit to stand trial, although the charges against her would remain.
"The co-prosecutors have appealed against the court's decision to release Ieng Thirith and the conditions attached," court spokesman Neth Pheaktra said.
"They are not satisfied with the trial chamber's decision. They want a release with conditions."
The former social affairs minister is believed to have Alzheimer's.
While prosecutors accept Ieng Thirith's diagnosis, they asked the court last month to impose six conditions for her release - including that she present herself for weekly safety checks by authorities and that she give up her passport.
Trial chamber judges said she would be incapable of remembering or adhering to any conditions, although they stipulated she should not interfere in the case in any way and should remain in Cambodia.
The court's highest appeal body now has 48 hours to decide whether or not to accept the appeal.
In the meantime, Ieng Thirith remains in the purpose-built detention facility where she has been held since her 2007 arrest.
She stands accused of war crimes, genocide and crimes against humanity for her role in the 1975-1979 regime, which by some estimates resulted in the deaths of more than two million people.
Three other ageing top former regime leaders - "Brother Number Two" Nuon Chea, ex-head of state Khieu Samphan and Ieng Thirith's husband - former foreign minister Ieng Sary - remain on trial.
Led by "Brother Number One", Pol Pot, who died in 1998, the communist Khmer Rouge wiped out nearly a quarter of the Cambodian population through starvation, over-work and executions in a bid to create an agrarian utopia.
The court has so far completed just one case, sentencing former Khmer Rouge prison chief Duch to life in jail this year for overseeing the deaths of some 15,000 people.