But the long-running legal case against sociologist Pinar Selek is not over yet. A higher court could still reverse that verdict.
Selek, now 40, has been accused of aiding and abetting Kurdish rebels who allegedly planted a bomb that caused the explosion. She was tried alongside a man who later claimed he was tortured by police and forced to testify against Selek.
Selek was acquitted of the charges in 2006 and 2007, but an appeals court overturned both verdicts and ordered new trials.
On Wednesday, a lower court again found Selek not guilty, but a higher court must decide whether to uphold that ruling.
"Let's hope this verdict will be upheld and the case will finally end," the Anatolia news agency quoted Selek's father and lawyer, Alp Selek, as saying.
Selek, who could be imprisoned for life if she is convicted, has maintained her innocence throughout her 13-year ordeal.
During that time, she spent two years in police custody and claimed she was tortured. But she has since been allowed to leave Turkey and now lives in Germany.
She was not in court for Wednesday's verdict.
Turkey's judicial system has been criticized for repeatedly trying people for the same crime, and Selek's case is being watched internationally because it comes at a time when Turkey hopes to become a member of the European Union. To do that, it would have to comply with the EU's judicial regulations.
Emma Sinclair-Webb, a Turkey researcher at the New York-based Human Rights Watch, said Wednesday she believes Selek's case shows that Turkey's judicial system is flawed.
"The trial of Pinar Selek is a perversion of the criminal justice system and abuse of due process," Sinclair-Webb said in a statement.
The case also has been complicated by contradictory reports regarding the cause of the deadly explosion in Istanbul in 1998. Authorities disagree whether the blast at the historic spice bazaar was caused by a bomb or a gas leak.
On Wednesday, Selek's father said he cried tears of joy when he heard the latest verdict.
"A 13-year-old legal battle is not easy. How many times have we come and gone to this courthouse?" he said.