Tsvangirai, who might have faced a death sentence if convicted, smiled broadly as the verdict was announced and his supporters broke out in spontaneous applause in the packed colonial-era High Court building at the heart of Harare.
"The evidence led has not shown beyond reasonable doubt that there was such a request (for an assassination and a coup d'etat)," Judge President Paddington Garwe said on Friday. "The court therefore returns a verdict of 'not guilty'."
Tsvangirai, 52, and the biggest challenger to Mugabe's 24-year-old rule, had pleaded not guilty to a treason charge of planning to kill Mugabe and seize power ahead of presidential elections in 2002.
He still faces separate treason charges linked to anti-Mugabe protests the MDC tried to organise in 2003.
Earlier police toting batons or rifles dispersed around 200 opposition supporters and arrested three people, including a journalist they accused of reporting without accreditation required by tough media laws introduced by Mugabe's government.
Mugabe has ruled Zimbabwe
since independence in 1980
Security forces were on high alert after the government said it had learned of plans to unleash violence after the verdict.
Dozens of riot police stood on guard outside the court while more riot police set up roadblocks on some of Harare's main roads, searching vehicles heading towards the city centre.
Tensions have run high in the lead-up to the verdict, with the government and the MDC accusing each other's supporters of scheming to disrupt proceedings at the court.
The MDC had dismissed the trial as a charade intended to crush its five-year-old challenge to Mugabe's grip on power, and declared that democracy was on trial in Zimbabwe.
The state case against Tsvangirai in the main trial rested on a secretly taped video of a Montreal meeting between him and Canada-based political consultant Ari Ben-Menashe, where prosecutors said Mugabe's "elimination" was discussed.
"The evidence led has not shown beyond reasonable doubt that there was such a request (for an assassination and a coup d'etat)"
Judge President Paddington Garwe
Defence lawyers said Tsvangirai discussed suggestions that Mugabe might accept a plan to retire before March 2002 presidential polls. Mugabe won that vote amid charges of rigging from the MDC and some Western nations. Tsvangirai has challenged the result.
In a trial that stretched for a year to February, chief defence lawyer George Bizos - who defended South Africa's Nelson Mandela in a 1960s treason case - attacked the credibility of Ben-Menashe, the state's key witness.
Mugabe, 80, has ruled Zimbabwe since independence from Britain in 1980. The former guerrilla leader says Tsvangirai is a puppet of Western powers seeking to overthrow him for seizing farms from whites for redistribution to landless blacks.