A jury of 13 pastors said it decided in favor of the Rev. Karen Dammann "after many hours of painful and prayerful deliberations, and listening for and to the word of God."
Dammann, 47, married her partner of nine years last month in Oregon, where officials have been allowing gay marriages. "It's been heart-stopping at times, too exciting at times," she said after the verdict.
Meredith Savage, Dammann's partner, said she called their 5-year-old son and shouted, "Mama won!"
While the verdict could alienate some conservatives within the Methodist church, Dammann's prosecution was painful for many in the Seattle area.
The United Methodist clergy of the Pacific Northwest Conference had voted to retain Dammann after she disclosed that she was in a homosexual relationship, but the denomination's Judicial Council reversed that decision last fall.
Church law prohibits the ordination of self-avowed, practicing homosexuals and the church's Book of Discipline declares homosexuality to be "incompatible to Christian teachings."
The Rev. James C. Finkbeiner, who prosecuted the case, said he believed the jury overstepped the bounds of church law. "And I don't feel bad about that. Our process is fair."
Then, with permission from Bishop Galvan, Finkbeiner spoke for himself, adding, "I'm glad I lost, on a personal basis."
If nine of the 13 clergy members on the jury had voted to convict her, Dammann could have lost her ministry. The church cannot appeal the verdict.
About 100 people attended a prayer service immediately after the verdict was announced. The Rev. Rody Rowe, pastor of Queen Anne United Methodist Church in Seattle, told the gathering they could pray silently or voice their thoughts.
After a long silence, one woman said, "I pray for our church, for those who will rejoice and for those who will gnash their teeth and wail."
Bishop Elias Galvan of Seattle acknowledged the verdict will upset some people.
"The church is not of one mind," Galvan said. "I expect this issue to continue to be raised until society comes to terms with it."
Dammann has been on leave as pastor of First United Methodist Church in Ellensburg, 95 miles east of Seattle. The ruling means she is in good standing with the church and available for new assignments.
Dammann said her immediate plans are to continue caring for her son, who has a respiratory illness, but she hopes one day to return to the Ellensburg church.
The trial is the first against a homosexual Methodist pastor since 1987, when the credentials of the Rev. Rose Mary Denman of New Hampshire were revoked.
The United Methodist Church, the nation's third-largest with 8.5 million U.S. members, has struggled publicly with the issue of homosexuality since 1972. In that year, the General Conference declared homosexuals "persons of sacred worth" but found homosexuality "incompatible with Christian teaching."
Still, the denomination's social principles support gay rights and liberties. Since the late 1980s, Pacific Northwest church leaders have petitioned to ease policies on homosexuality at each of the denomination's General Conferences, held every four years. During past international General Conferences, most attendees have opposed change.
Similar rifts have developed in other Christian denominations — most notably in the Episcopal Church, which confirmed an openly gay bishop last year. Since then, several conservative parishes have threatened to break ties with the denomination.
Dammann declared her sexual preference in February 2001, when she sought a new church appointment. After receiving her letter, Galvan, under church orders, filed a complaint against Dammann.
Galvan said the trial was painful for him because he respects and admires Dammann.
"I think the jury was looking for a way to be faithful to the Book of Discipline and I think they did that," Galvan said. "As soon as she's able to return to ministry, we'll welcome her and appoint her."