The International Criminal Court in The Hague acquitted Gbagbo and his former youth minister of all crimes and ordered they be released.
In 2011, Gbagbo refused to hand over power to President Alassane Ouattara, sparking violent protests in the country. French troops and the United Nations intervened to stop the fighting and found Gbagbo hiding in a bunker with his wife.
Thousands died and hundreds of thousands were displaced during the ensuing civil war.
Judges of the international court ruled Gbagbo and youth minister Charles Ble Goude had no plans to retake power after the vote, so there was "no need for defense to submit further defense, as the prosecutor has not satisfied the burden of proof."
Prosecutors could appeal the decision, which could impose conditions on Gbagbo's release from prison. The original conviction was a landmark win for prosecutors, and his release weakens their overall position.
"The acquittal of Gbagbo and Ble Goude will be seen as a crushing disappointment to victims of post-election violence in Cote d'Lvoire," Marie-Evelyne Petrus Barry, director of Amnesty International's West and Central Africa division, said in a statement. "However, the judges found that the Office of the Prosecutor had not presented evidence needed to prove its case beyond reasonable doubt ... This ICC ruling reminds us that fair trial and due process must be at the heart of international criminal justice."
The ICC has been accused of being one-sided in aftermath of the 2011 protests, with prosecutors focusing on Gbagbo and his regime rather than Ouattara commanders.
Gbagbo came to power in 2000 and managed to hold off another election for a decade. The 2010 vote forced a runoff the next year, which Ouattara won.