The man, identified only by the surname Lee, was born in 1916, South Korean newspaper Segye Ilbo reported Tuesday. He'd criticized then-South Korean President Park Chung Hee while out drinking and said "North Korea's Kim Il Sung is clever."
He also said Park "is not good at politics," and that "it is difficult to live [in South Korea]."
Lee also cursed Park and had said the former South Korean leader was someone who ought to be killed.
South Korean intelligence was subsequently apprised of Lee's statements and the man was prosecuted and sent to prison for a year and six months.
The decision to clear Lee came after South Korea's Supreme Prosecutors' Office filed an appeal to a local court to "settle past grievances," part of a larger policy of the current Moon administration.
A Seoul high court said Tuesday Lee was not guilty, because he was found in violation of Emergency Measure No. 9 for expressing opposition to the Yushin regime of Park Chung Hee. The measure is invalid, the court said.
South Korea has accelerated engagement with the North this year, but national security laws remain firmly in place.
The frequent meetings between Moon and Kim Jong Un are changing North Korean perceptions of South Korea, according to local reports.
Lee Sang-yong, the editor-in-chief of Daily NK, told local network SBS Moon's act of bowing deeply at a "90-degree angle" took ordinary North Koreans by surprise.
In interviews with North Korea-based sources, Moon's act appeared to be "sincere" and unprecedented for a leader, Lee said.
Moon's approval rating has risen to more than 65 percent following his summit in Pyongyang with Kim, according to Realmeter.