Eighty-eight of the 202 people killed in the 2002 Bali nightclub bombings came from Australia.
Bashir's son, Abdurrahmin, said his father had received word of the verdict.
"Thank God the Supreme Court has finally revealed the final truth,'' he told the Associated Press via telephone. "He is praying now to say thanks to God that his prayers have been accepted."
Since his release Bashir has gone on a speaking tour around Indonesia, basing himself at the Islamic school he co-founded on the outskirts of the city of Solo in central Java.
Jemaah Islamiyah, or JI, dates from the early 1970s and traces its roots to Darul Islam, a movement advocating the application of Islamic law in Indonesia through force.
The last known attack carried out by JI was on October 1, 2005, when a series of suicide bombings killed at least 19 people and wounded more than 100 in Bali.
Experts disagree on the extent to which JI might have ties to al-Qaeda. Some say JI is al-Qaeda's Southeast Asian wing while others argue that JI's regional goals do not match al-Qaeda's global ambitions.
Abu Bakar Bashir himself has denied any connection with al-Qaeda and has described JI militants as "misguided".
Western and Asian intelligence officials say that while JI's recruitment continues, there are some indications that its support base is shrinking.