Shimeles Kemal, the lead prosecutor in the case, said he had some reservations about the ruling and "may consider an appeal on certain issues".
But while 25 have been freed, the judge ordered other defendants, including leaders of the Coalition for Unity and Democracy, Ethiopia's main opposition party, to give their defence in the case against them.
The case, which has angered human rights activists, began in December 2005 when more than 100 people, made up of activists, opposition leaders and journalists were charged with treason, inciting violence and attempting to commit genocide.
The charges followed two clashes, in which at least 80 people were killed, between protesters and security forces over the results of Ethiopia's 2005 general elections.
Opposition leaders claimed that the vote, which returned Meles Zenawi, the Ethiopian prime minister, to power, was rigged and EU observers said the polls were marred by "irregularities".
The genocide charge, now dropped, that was brought against the defendants was because they had been accused of targeting Ethiopia's Tigrayan ethnic group, to which Zenawi belongs.
Tigrayans are from the north of the country and make up fewer than one in 10 of Ethiopia's 77 million people.
Rights groups condemned Zenawi's crackdown, accusing the Ethiopian leader of trying to silence government critics, while Britain and the EU halted direct budgetary aid to Ethiopia.
Of the 131 people first charged, 45 have now been acquitted and 36 are being tried in absentia.