Nero had faced assault, misconduct in office and reckless endangerment charges. Prosecutors said the 30-year-old unlawfully arrested Gray without probable cause and was negligent when he didn't buckle the prisoner into a seat belt. He is one of six officers charged in the aftermath of Gray's death.
As the verdict was read, Nero dropped his head down and his attorney placed a hand on his back. The courtroom was quiet.
When the judge said he was not guilty, Nero stood up and hugged his attorney, and appeared to wipe away a tear.
"The state's theory has been one of recklessness and negligence," Baltimore Circuit Judge Barry Williams said. "There has been no evidence that the defendant intended for a crime to occur."
Nero opted for a bench trial rather than a jury trial.
After the verdict, a Baltimore Police Department spokesman said Nero's status "in an administrative capacity" will not change.
Spokesperson T.J. Smith said the internal investigation of Nero's case is ongoing, and that it is "being handled by other police departments."
"The internal investigation will not be completed until all of the criminal cases against the other five officers are completed because they will likely be witnesses in each case," Smith said.
After the verdict was read, Baltimore Mayor Stephanie Rawlings-Blake released a statement that seemed to once again refer back to and warn against the violent unrest the gripped the city immediately following Gray's death.
"We once again ask the citizens to be patient and to allow the entire process to come to a conclusion," Rawlings-Blake said. "In the case of any disturbance in the city, we are prepared to respond. We will protect our neighborhoods, our businesses and the people of our city."
After the verdict, the small number of protesters that had gathered outside the courthouse earlier in the day remained largely peaceful.
Congressman Elijah Cummings, D-Md., issued a statement thanking Nero for his service, and said the focus now should be on reforming the criminal justice system.
"I believe that we are on the road to creating a city that uplifts all of its residents," Cummings said. "Today's verdict should not take us off course, instead, it should remind us of the importance of the road ahead."
The Baltimore police officers' union released a statement praising the verdict, adding that Nero's relief is tempered by the fact that five other officers await trial.
Gray died April 19, 2015, a week after his neck was broken in the back of a police transport van while he was handcuffed and shackled but left unrestrained by a seat belt.
His death set off more than a week of protests followed by looting, rioting and arson that prompted a citywide curfew. His name became a rallying cry in the growing national conversation about the treatment of black men by police officers.
Shortly after Gray's death, State's Attorney Marilyn Mosby charged six officers. Three of them are black; Nero and two others are white.
Nero's attorney argued that his client didn't arrest Gray and that it is the police van driver's responsibility to buckle in detainees. The defense argued that the officers who responded that day acted responsibly, and called witnesses to bolster their argument that any reasonable officer in Nero's position would have made the same decisions.
The defense also sought to convince the judge that the department's order requiring that all inmates be strapped in is more suggestion than rule because officers are expected to act with discretion based on the circumstances of each situation.
Nero is the second officer to stand trial. Officer William Porter's manslaughter trial ended with a hung jury.