Charges were also dropped against Rwigara's mother Adeline, and four others with whom she had exchanged Whatsapp messages accusing the government of killing her husband Assinapol Rwigara, who died in a auto accident in 2015 that his family has long held was an assassination.
The pair faced up to 22 years in prison for the charges in the case that drew worldwide attention to the East African country.
"I am very happy with the verdict", said Ms Rwigara, who has been out on bail since October. I am continuing with my political journey ...everything I talked about in the past has not been resolved.
On Tuesday, a commission of the US House of Representatives held a briefing on human rights and political prisoners in Rwanda, drawing attention to the Rwigaras. And she thanked everyone who pressured the government to free her. Dick Durbin noting "what appears to be highly questionable charges against Rwigara for seemingly running for office peacefully".
The three-judge panel said there was no proof that Rwandans had been incited against the state after Rwigara's remarks to the media, and that intercepted WhatsApp audio files of her mother did not incite insurrection and instead were private conversations.
Amnesty International welcomed the court's decision.
She added: "This is what happens when you dare to have a different political opinion - a different view from those in the government".
Speaking to The Associated Press ahead of her court appearance, Rwigara remained defiant, saying no amount of pressure will silence her.
Rwigara, 37, was arrested in September 2017 after her attempt to run in Rwanda's presidential election was denied on grounds she allegedly forged the signatures of supporters for her bid.
"I hope to be cleared of all these made-up charges but I am ready for any outcome", she said earlier this week.
The Rwigara family assets and stock of their tobacco company have been auctioned off by the country's revenue authority which said it was recovering unpaid taxes.
Kagame is largely credited with the development and stability that Rwanda has experienced since the 1994 genocide in which 800,000 people were killed; he has also spearheaded gender equality, and 61% of parliamentarians are women.