There was standing room only at the courtroom on the edge of Baghdad's Green Zone as some 200 family members, reporters and lawyers crowded in.
Al-Rubaie later cleared the court before returning his verdict.
Asked if he was innocent, al-Zaidi responded: "Yes, my reaction was natural, just like any Iraqi (would have done)."
Bush was speaking on December 14 at a joint news conference in Baghdad with Nuri al-Maliki, the Iraqi prime minister, when al-Zaidi hurled his shoes at him.
The shoes narrowly missed Bush, who later brushed the incident aside.
As well as throwing the shoe, al-Zaidi shouted "It is the farewell kiss, you dog", before security forces wrestled him to the ground.
He later said he had been beaten and tortured in custody.
Shoe-hurling is considered an especially grave insult in the Arab and Muslim world and al-Zaidi had risked up to 15 years in jail on the charge of aggression against a foreign head of state.
'Prisoner of war'
After the verdict on Thursday, al-Zaidi's 25-strong defence team emerged from the courtroom to scenes of chaos. Several family members screamed: "It's an American court ... sons of dogs."
One of his brothers, Uday, said the decision was political.
"This is a political court. Muntadhar is being treated like a prisoner of war. He is not a normal prisoner ... This decision has been taken by the prime minister's office."
Al-Zaidi shouted "Iraq, long live Iraq" after the verdict was read out, Yahia Attabi, a defence lawyer, said.
"We expected the decision because under the Iraqi criminal code he was charged with assaulting a foreign leader on an official visit."
Attabi said al-Zaidi will appeal the decision.
The family said they would not only appeal but also press ahead with plans to bring torture charges against Bush, al-Maliki and his bodyguards at a human rights court abroad.
Ehiya al-Sadi, the chief defence lawyer, had argued that his client's motives were "honourable".
"He was only expressing his feelings. What he could see was the blood of Iraqis at his feet when he watched the US president speaking about his achievements in Iraq."
Al-Sadi also argued that although Iraqi law considered it an attack on a visiting head of state, "[al-Zaidi's] throwing of the shoe did not cause any injury or damage ... His goal was to insult Bush for the pain Iraqis have suffered".
The trial opened on February 19 but was adjourned to determine the nature of Bush's December visit.
Al-Zaidi told the court last month that he had been outraged and was unable to control his emotions when Bush started speaking to the media.
"I had the feeling that the blood of innocent people was dropping on my feet during the time that he was smiling and coming to say bye-bye to Iraq with a dinner.
"So I took the first shoe and threw it but it did not hit him. Then spontaneously I took the second shoe but it did not hit him either. I was not trying to kill the commander of the occupation forces of Iraq."