The Bombay High Court threw out an earlier conviction and five-year sentence given the 49-year-old actor.
"The trial court's verdict is quashed and set aside," Justice A.R. Joshi said in reading the verdict to a crowded courtroom, according to the Press Trust of India news agency. "Salman is acquitted of all charges."
The judges said in their ruling, which was read over several days, that prosecutors had failed to prove charges of culpable homicide, in which they accused Khan of driving while intoxicated in 2002 and running over five men sleeping on a sidewalk in Mumbai, killing one of them.
Khan, one of Bollywood's most popular stars, reportedly broke down in tears after the verdict was read. He was accompanied in court Thursday by family members and a bodyguard.
Khan has appeared in more than 90 Hindi-language films in his 27-year career, and is best known as a romantic action hero. In recent years he turned to philanthropy, establishing a charitable trust called "Being Human" which works in education and health care for the poor.
(AP)