Mubarak, who ruled for three decades until being driven from office, was also acquitted of a corruption charge but will stay in jail on a three-year sentence in a separate graft case.
The ruling enraged the strongman's opponents, with about 1,000 converging on a central Cairo square to denounce the government.
A health ministry official said one person was shot dead after police fired tear gas to disperse the protesters, resulting in scattered clashes. Police arrested at least 100 protesters.
Seven of Mubarak's security commanders, including feared former interior minister Habib al-Adly, had also been acquitted on Saturday over the deaths of some of the roughly 800 people killed during the revolt.
Cheers erupted in court and Mubarak's sons Alaa and Gamal kissed his forehead when the judge read the verdict in the retrial as the ex-president, 86, lay in an upright stretcher inside the caged dock.
Corruption charges against the sons were also dropped.
The usually stone-faced Mubarak, wearing his trademark sunglasses, allowed himself a faint smile after the verdict was read.
But relatives of those killed expressed dismay.
More than 1,000 protesters gathered at an entrance to Cairo's Tahrir Square -- the hub of the revolt -- chanting "The people demand the toppling of the regime".
They scattered into side streets when police fired tear gas and used water cannon. Gunshots could later be heard throughout central Cairo.
An appeals court had overturned an initial life sentence for Mubarak in 2012 on a technicality. Saturday's verdict may also be appealed.
Mubarak, who was transported back to a Cairo military hospital where he is being held, appeared in a wheelchair from a balcony door to wave at several dozen cheering supporters.
"I did nothing wrong at all," he told a private Egyptian broadcaster by telephone.
He also praised his time in office, which was marred by police abuses and corruption, especially the decade before his overthrow.
Apparently referring to economic growth, he said: "The last 10 years showed more results than the 20 years before... and then they turned against us."
His lawyer Farid al-Deeb told AFP the verdict was "a good ruling that proved the integrity of Mubarak's era".
Many Egyptians increasingly look with nostalgia to the stability of the Mubarak era in light of the subsequent turmoil.
Signup to our newsletter and follow us on Facebook and Twitter!
Mohamed Morsi, the Islamist who eventually succeeded him, was toppled by the army in 2013 following massive protests.
Mubarak's supporters leapt from their benches in celebration when the judge pronounced the verdict, chanting: "Say the truth, don't be scared -- Mubarak is innocent."
In a summary of its reasoning, the court cited witnesses -- all former security commanders -- saying the police did not use live ammunition against protesters during the deadliest day of the 2011 revolt.
Outside the court, a police academy on Cairo's outskirts, relatives of the dead were appalled.
"It's an oppressive ruling. The blood of my son has been wasted," said Mostafa Morsi.
Opinion on the streets was divided.
"Justice for the martyrs has been lost," said one woman in her 50s.
Retired government worker Mostafa Saed disagreed, saying: "There is no evidence against Mubarak. He was an honest president."
Protesters during the revolt vented years of pent-up fury over police abuses and corruption by attacking and torching police stations nationwide, leaving the interior ministry on the brink of collapse.
Chief judge Mahmud Kamel al-Rashidi, 63, suggested his ruling was made with a clear conscience.
"God will ask me 'what did you do in this world, and specifically what did you do as a judge'," he told the court before pronouncing his verdict.
He said he dropped the murder charge because the prosecution should not have added Mubarak to the case initially made against his security chiefs.
A leading rights lawyer, Gamal Eid, said the prosecution had initially moved to place his security commanders on trial and included Mubarak in the case under public pressure.
"The court can distance defendants from a case who had not initially been among the accused," he told AFP.
During the uprising, hundreds of thousands of protesters rallied daily, demanding that Mubarak step down. After he resigned, they continued to hold protests demanding his trial.
Once-banished Mubarak-era officials have since made a comeback, using a backlash against former opposition figures blamed for the later unrest.
Prime Minister Ibrahim Mahlab was a senior official in Mubarak's now-dissolved party. Mubarak's former military intelligence chief Abdel Fattah al-Sisi is now president, having been elected after deposing Morsi.
Police are waging a deadly crackdown on pro-Morsi Islamist protesters and militants, and Morsi is standing trial on several charges including taking part in jail breaks and violence during the anti-Mubarak revolt.