Lorenzo Vinciguerra, 49, made a grab for his guard's machete during a clash between the armed militant group, known as Abu Sayyaf , and the Philippine armed forces.
As chaos erupted around him, the pair fell to the floor wrestling over the blade. The Swiss national received a cut to the cheek but managed to overpower his attacker by slashing him on the neck, Colonel Allan Arrojado, commander of the army's Joint Task Group on the island of Sulu, told The Guardian.
Running away from the Islamic group, Mr Vinciguerra was shot and wounded by another militant but managed to keep going until he was finally rescued by Philippine army scout rangers.
'He was wounded, but he's well and recovering in a hospital,' regional military commander Lieutenant General Rustico Guerrero told bberitaa.blogspot.com by telephone.
Mr Vinciguerra was seized in February 2012 with 52-year-old Dutchman and fellow birdwatcher Ewold Horn on Tawi Tawi Island by Abu Sayyaf group.
The organisation, founded in the early 1990s on Basilan island, near Jolo, is a small but violent Islamic organisation that vowed to wage jihad, or holy war, against the predominantly Roman Catholic Philippines.
A lack of leadership and years of US-backed military bombardments has set the group on a path of criminality and increasing violence. The group has openly declared its support of Isis, also known as the Islamic State.
The fate of Mr Hom remains unclear, although Mr Vinciguerra - speaking from his hospital bed where he is reported to be recovering well - said: 'I talked to him and asked him to join me, but he refused'.
He added that the Dutchman had teeth problems and other ailments.
The Islamic group continue to hold onto several other foreign and Filipino hostages, according to Reuters. A military operation in June helped to secure the release of two German hostages from the clutches of the extremists.
In the latest fire-fight the Philippine military claimed that five militants were killed and seven further injured.
Mr Vinciguerra added: 'My final message to everybody: Put the gun down and come out from the forest'.
'It's a nice life out here.'
Additional reporting by Associated Press
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