Naki, 27, was prosecuted for a message he posted on Facebook after scoring the winning goal for the Turkish club Amed SK, in a crucial match in January.
He dedicated that victory to victims of the Kurdish conflict. He is Alevi-Kurdish and moved to Turkey in 2013.
He was accused of spreading terrorist propaganda for the banned PKK group.
Turkish forces have been battling the Kurdistan Workers' Party (PKK) in eastern Turkey since a ceasefire collapsed in July 2015. Turkey, the EU and US consider the PKK to be a terrorist organisation.
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Germany's Bild daily reported that the court session lasted just 35 minutes and that even the state prosecutor called for the case to be terminated.
The charge could have resulted in Naki getting five years in jail. He argued that his Facebook post was intended as a message of peace.
He is currently under a 12-match ban imposed by the Turkish Football Federation for "ideological propaganda" linked to the Kurdish conflict.
Naki previously played for German clubs St Pauli and Paderborn, and was selected for the German under-21 squad.
"I'm happy and relieved," he said after his acquittal. "I could not assume, looking at how things are developing now in Turkey, that I would be acquitted."
Two left-wing German MPs, Cansu Ozdemir and Jan van Aken, flew to Diyarbakir - the trial venue - to show solidarity with Naki.
Mr van Aken, quoted by Bild, said the court verdict showed that "for once international pressure worked". He gave Naki a St Pauli team jersey bearing all the players' signatures.
Diyarbakir is a mainly Kurdish city wracked by political violence and it is where Naki's club Amed SK is based.
Naki has the Kurdish word for freedom - "azadi" - tattooed on one arm. On the other he has a tattoo reading "Dersim 62" - the traditional name for his ancestral town Tunceli and its vehicle number plate identifier.
The PKK says it is fighting for more Kurdish autonomy and ethnic rights, denying Turkish claims that it wants to create a separate state.
A Turkish court has acquitted a German-born former international footballer, Deniz Naki, who was charged with promoting the Kurdish PKK rebel cause.