The judgement by a court in the Mediterranean city of Alexandria comes as global rights groups increasingly accuse President Abdel Fattah al-Sisi's regime of brutally repressing all opposition.
Colonel Hossam al-Shinnawi became the fourth out of five officers to be acquitted in the case of torturing to death Sayed Bilal, an Islamist who was arrested over a church bombing in Alexandria.
The fifth officer is still awaiting a verdict.
All five are former members of the state security apparatus, and they were given separate retrials after a lower court found them guilty in 2012.
Shinnawi and three others were initially sentenced to life imprisonment, while another officer was handed a 15-year jail term.
The court did not immediately give its reason for Tuesday's order to acquit Shinnawi.
More than 20 churchgoers were killed weeks before the 2011 uprising against ex-president Hosni Mubarak when a suicide bomber detonated his explosives in front of a church after a New Year's Eve mass.
Police rounded up Islamists, including Bilal, belonging to the hardline Salafi movement after they held protests against the Coptic Church, which they accused of detaining a woman who converted to Islam.
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Bilal's badly bruised body was returned to his family a day after his arrest over the church attack, rights activists said at the time.
His lawyer criticised Tuesday's judgement.
"Today, the policemen have no accountability and are safe from any punishment," said Ahmed al-Hamrawi.
Police abuses were a major trigger for the 2011 revolt against Mubarak.
Dozens of policemen were tried for the deaths of protester after the revolt against Mubarak, but most were acquitted.
The police force has managed to rehabilitate itself in the eyes of many Egyptians despite its deadly crackdown on supporters of Mubarak's successor, Islamist president Mohamed Morsi.
In recent months six policemen have been jailed in separate cases of deaths in custody.
In December, Sisi had warned that police officers found guilty of "committing mistakes" would be punished.