The unanimous ruling by the five-member court set aside Sharif's life sentence, handed down in 2000 by an anti-terrorism court, in a case that was filed by the government of former President Pervez Musharraf.
Sharif, now the leader of a faction of the Muslim League party, had dismissed Musharraf as army chief in 1999. The former prime minister was subsequently removed in an army coup.
Sharif, who had consistently maintained his innocence, was sentenced after being found guilty of refusing to allow a commercial aircraft carrying Musharraf and 200 other passengers, from landing at Karachi airport. The charge against Sharif was hijacking the general's plane.
The brief Supreme Court ruling said the charges against Sharif were not proved, Dawn newspaper reported.