Last December, Perihan Magden wrote a column in Turkey's Yeni Aktuel magazine defending a conscientious objector who was sentenced to four years in a military jail for refusing to wear his uniform.
The column angered the country's conservatives and led to a complaint from the Turkish armed forces general staff.
The prosecution was seeking up to three years in jail for Magden for "prompting, encouraging or spreading propaganda to deter people from accomplishing military service".
In Turkey, all men over the age of 20 are required to serve up to 15 months in the armed forces. The law does not allow conscientious objection.
However, the court in Istanbul ruled that Magden's opinions fell within the scope of freedom of expression and therefore did not constitute a crime under Turkey's revised penal code.
Magden, famous for her column and novels The Messenger Boy Murders and Two Girls, was not in court to hear the verdict.
'War of nerves'
In an interview with Aljazeera before the court ruling, Magden said that the case was a form of "psychological torture" to stop her from writing.
"They want you to show up in court, they want the lynch mob to humiliate you, they want to show you can't speak your mind, write your mind," she said.
"It's a war of nerves."
Dozens of writers and journalists face prosecution in Turkey accused of insulting the state and its institutions.
Last month, the EU urged Turkey to amend an article in its penal code in order to guarantee freedom of expression, however Turkey, which is seeking EU membership, has so far resisted the call.