Genarlow Wilson's case led to widespread protests of racism and heavy handed justice. Wilson and the girl - both black - were only two years apart.
"I never gave up hope in our judicial system, and I never gave up hope in all the prayers people sent out for us," Wilson's mother, Juannessa Bennett, told reporters.
Wilson, 21, offered advice to other teens: "They should be very hesitant before they join certain crowds and make certain decisions."
In its 4-3 decision, the Georgia Supreme Court noted that state lawmakers later scrapped the law that required a minimum 10-year prison term.
That change, the court said, represented "a seismic shift in the legislature's view of the gravity of oral sex between two willing teenage participants."
The justices also said Wilson's sentence made "no measurable contribution to acceptable goals of punishment," and his crime did not rise to the "level of adults who prey on children."
After he was imprisoned, Wilson became the subject of prominent editorials and national news broadcasts. His sentence was denounced even by members of the jury that convicted him and the author of the 1995 law that put him behind bars.
Wilson, a former honor student and homecoming king, was convicted of aggravated child molestation following a 2003 New Year's Eve party in a hotel room where he was videotaped having oral sex with a 15-year-old girl.
Wilson, who was 17 at the time, was acquitted of raping another 17-year-old girl at the party.
State Attorney General Thurbert Baker said he hopes Friday's ruling puts "an end to this issue as a matter of contention in the hearts and minds of concerned Georgians and others across the country who have taken such a strong interest in this case."
The man who prosecuted Wilson, Douglas County District Attorney David McDade, said he disagreed with the decision, but he respects the court "as the final arbiter."
Wilson's supporters were jubilant.
"It's been a long time coming," said Rep. John Lewis, an Atlanta Democrat. "Each day that this young man spent in prison was a day too long."
Civil rights activist Jesse Jackson, who is visiting Georgia this week, called for an end to mandatory minimum prison sentences.
The 1995 law Wilson violated was changed in 2006 to make oral sex between teens close in age a misdemeanor, similar to the law regarding teen sexual intercourse. But the state Supreme Court later upheld a lower-court ruling that said the 2006 law could not be applied retroactively.
The high court had turned down Wilson's appeal of his conviction and sentence, but the justices agreed to hear the state's appeal of a judge's decision to reduce Wilson's sentence to 12 months and free him. That judge had called the 10-year sentence a "grave miscarriage of justice."
State lawmakers announced they had raised $4,000 toward a scholarship fund for Wilson, and Jackson promised another $5,000 from the Rainbow/PUSH organization.