Malik has been sworn in at a ceremony in the capital Islamabad, where she now sits on the bench alongside 16 male colleagues at Pakistan's highest court.
Though historic, the move has been divisive as some opposed the decision because they say the appointment of Justice Ayesha Malik was made in contravention of seniority lists.
Islamabad had been scrambling to keep Sheikh in jail since a Supreme Court order upheld his acquittal in the death of Pearl, triggering outrage by Pearl's family and the US administration.
The incident of the Hindu temple being razed down and demolished by supporters of a religious party drew the attention of Pakistan's Supreme Court which has set a date to hear the matter in the new year.
Foreign ministry spokesman Mohammad Faisal says the Christian woman, who is currently at an undisclosed location for her own safety, is free to leave Pakistan and seek asylum abroad.
Investigative agencies detain head of the Securities and Exchange Commission of Pakistan, Zafar Hijazi, over allegations of forging documents to protect Prime Minister Nawaz Sharif and his family in the Panama corruption case against them.
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