But authorities will continue to detain the preacher because of separate charges related to a plot to attack tourists during Jordan's New Year celebrations in 2000.
"The court announces the acquittal of the defendant for lack of evidence," said Ahmad Qatarneh, the judge presiding over the three-man military tribunal, which has drawn the criticism of human rights advocates.
Abu Qatada, sitting on a bench in an enclosed iron dock, smiled and looked relaxed during the half-hour court session. Dressed in brown prison fatigues, he was flanked by black-clad security officers.
Members of his family cried out for joy when the verdict was read and his wife and her relatives burst into tears. "Thanks and praise to God!" they shouted.
Abu Qatada had previously been sentenced in absentia by a Jordanian court to life imprisonment for conspiracy to carry out al Qaeda-style attacks against US and other targets inside US ally Jordan.
The court session yesterday was a retrial in which the prosecution had argued Abu Qatada was a mentor to militant cells in Jordan while he was in Britain, providing spiritual and material support to a campaign of violence during the late 1990s.
But the court quashed the conspiracy charges and postponed another hearing on the New Year plot charges until September 7.
Abu Qatata's defence lawyer Ghazi Thunaibat said he hoped the second trial would bring a similar sentence.
He said: "My client has spent too long in prison unfairly and we hope the next verdict will finally end his plight and allow him to resume a normal life with his family."
In December, Mr Thunaibat called for his client's release, saying his rights had been violated by the presence of the military judge in court and reliance on hearings of evidence extracted under torture from other defendants.
Despite the acquittal, the court upheld a confession which had convicted Abu Qatada in absentia in the earlier trial. The defence said the confession had been extracted under torture.
European and British courts used the confession to delay his deportation until he agreed to return to Jordan for a retrial.
Abu Qatada's return to Jordan was made possible by an extradition treaty adopted by Jordan and Britain that satisfied the concerns of British judges about the use of evidence obtained through torture.
Jordan regularly arrests Islamist suspects and puts them on trial in military courts that rights groups say are illegal and lack proper legal safeguards. Jordan denies it convicts people using confessions extracted under duress.
Linked by a Spanish judge to the late al Qaeda leader Osama Bin Laden, Abu Qatada has been in and out of jail in Britain since 2001. He was extradited to Jordan in July last year.
Jordanian security officials and experts on Islamist radical groups say Abu Qatada's ideological writings have influenced many youths involved with al Qaeda.
Prime Minister David Cameron's spokesman said yesterday: "This is a man who the British courts have deemed a risk to national security."