The Cairo court erupted in cheers when the judge said Mubarak should not have been a defendant in the case as the charges against him were added late.
Charges against seven senior ex-officials were also dropped. The decision could be appealed.
Victims’ relatives waiting outside expressed dismay and frustration.
In a TV interview after the ruling, Mubarak said he had done “nothing wrong at all”.
The former president, 86, is serving a separate three-year sentence for embezzlement of public funds.
He is currently being held in a military hospital, and is expected to serve at least a few more months of this sentence.
Mubarak, his former Interior Minister, Habib al-Adly, and six others had been convicted of conspiracy to kill and were sentenced to life in prison in June 2012, but a retrial was ordered last year on a technicality.
In all, some 800 people are thought to have been killed as security forces battled protesters in the weeks before Mubarak resigned on 11 February 2011.
However, the court documents at the retrial related to the deaths of 239 people and injuries sustained by 1,588, across 11 of the country’s regions.
As well as the murder charge, Mubarak was also cleared of a corruption charge involving gas exports to Israel.
His sons Gamal and Alaa were also cleared of separate corruption charges by the same court on Saturday.
The courtroom erupted in cheers as the judge dismissed the case
As supporters cheered the verdict, his sons and co-defendants stooped down to kiss his forehead.
Mubarak’s lawyer, Farid al-Deeb, told AFP news agency the verdict was a “good ruling that proved the integrity of Mubarak’s era”.
Later the former president gave an interview by phone to private Sada al-Balad TV.
“I did nothing wrong at all,” he said, adding that he was “relying on God” as he waited for the second verdict in the case.
Outside the police academy that used to bear his name, supporters and opponents of the former president gathered to hear the verdict – separated by police and a few layers of barricades. Hawkers stood on the sidelines offering Mubarak memorabilia.
The Mubarak faithful held aloft portraits of their former leader, calling for him to be acquitted. The former president, who had been brought in on a stretcher as usual, allowed himself a slight smile. Supporters hugged each other and danced in the streets. One woman told us it was the best moment of her life. “We always knew he was innocent,” she said.
A short distance away bereaved relatives held photos of loved ones killed by the security forces during the revolution of 2011. Several of them had been demanding Mubarak’s execution. When they heard the news, huddled around a car radio, one man collapsed, and started banging his head with his hands.
Almost four years after Hosni Mubarak was swept from power, many Egyptians have lost interest in the fate of their former leader.
The verdict means no-one has been held responsible for the killing of more than 800 protesters during the 2011 revolution. It is as if the dead committed mass suicide, said one Egyptian journalist on Twitter. (BBC)
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