Abu Qatada has been acquitted of plotting a terror attack on the American school in Amman for lack of evidence, but the radical cleric faces other terrorism charges and will remain in prison.
The cleric had been extradited from Britain after a lengthy legal process.
Judge Ahmad Qatarneh said the court did not find evidence to support charges against Abu Qatada that he conspired in late 1998 to carry out a terror attack on the American school in Amman.
He said: "Based on that, the court unanimously declares the innocence of Omar Mahmud Mohammed Otman (Abu Qatada) for lack evidence."
The cleric burst into tears when the judge made the ruling and members of his family hugged and kissed him.
Abu Qatada, a Palestinian-born preacher, was condemned to death in absentia in 1999 by an Amman court for conspiracy to carry out terror attacks.
The sentence was immediately commuted to life imprisonment with hard labour.
A year later, he was sentenced in absentia to 15 years for plotting to attack tourists in Jordan during millennium celebrations.
After being extradited from Britain last July, he is now appearing in a retrial and has pleaded not guilty to all charges.
The court adjourned the trial until 7 September.