A jury voted six to one on Friday to set Valentina de Andrade free after a 17-day long trial in Belem, Para state.
"Valentina de Andrade is acquitted of the charges," said judge Ronaldo Valle.
Andrade, 72, fainted after the judgment and received medical treatment even as victims' families protested the decision.
Andrade, said to be the leader of a sect called Superior Universal Alignment, was accused of killing three boys and castrating two between 1989 and 1993 in Altamira, 200km from Belem.
A defence lawyer presented a document in court from the Parana state police in southern Brazil showing that Andrade was not in Altamira when the crimes were committed.
Andrade believes she was contacted by a medium who told her boys born after 1981 were possessed by the devil, a group representing the victims said.
Four defendants have been sentenced in the case, which began in August, for prison terms of 35 to 77 years.
They include two doctors who were involved in the removal of the genitals of several boys.
The victims' families say there were 19 victims in all - boys aged between 8 and 13 who were kidnapped, tortured or killed in Altamira.
Not all the boys' cases were brought to trial this time because of insufficient evidence.
The prosecution has said it will appeal against the decision to free Andrade.