During the trial at the International Criminal Tribunal for the former Yugoslavia (ICTY), 34 out of 81 witnesses had to receive special protection.
Idriz Balaj, one of Haradinaj's co-accused, was also acquitted, while a third, Lahi Brahimaj, who headed a detention camp, received a six-year prison term.
The prosecution had asked for 25 years for the three former senior figures in the separatist ethnic Albanian Kosovo Liberation Army (KLA).
All had pleaded not guilty.
KLA 'movement'
Haradinaj, 39, was a commander of the KLA armed group at the time of the alleged atrocities, as was Balaj, 36, who allegedly headed a paramilitary unit known as the Black Eagles.
In 2005, after he was indicted by the ICTY, Haradinaj stepped down as prime minister of Kosovo and surrendered to the UN court.
Haradinaj's defence downplayed his role in the KLA, saying it was not really an army but "a movement of terrified Albanian civilians that grew out of village and family groupings".
Serbian officials condemned the acquittal, with Vojislav Kostunica, Serbia's outgoing prime minister, describing it as "mockery of justice" and Boris Tadic, the country's president, calling for an appeal two days after the verdict.
The ICTY is still demanding the arrest and handover of four Serbs, including Ratko Mladic, the former general accused of genocide over the 1995 massacre of 8,000 Muslims in the Bosnian enclave of Srebrenica.
Ethnic-Albanian-dominated Kosovo unilaterally declared independence from Serbia in February and has since been recognised by the United States and most nations of the European Union.