Mubarak’s former interior minister, Habib al-Adly, was also sentenced for life in prison for the protesters’ killing in January.
Meanwhile, corruption charges against Mubarak’s sons, Alaa and Gamal, were dropped.
Scuffles broke out soon after the verdicts were delivered, and chants of “Void, void” and “The people want the judiciary purged” could be heard.
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Lawyers inside the courtroom were furious over the acquittals, and told AFP they feared that Mubarak and Adly would be found innocent on appeal.
The former strongman, wearing dark classes and a beige tracksuit, showed no emotion as Judge Ahmed Refaat read out the sentence.
His two sons, both looking tired with dark circles under their eyes, appeared close to tears on hearing the verdict.
Clashes erupted out outside the court following the sentencing, as police used stun grenades to control the crowds.
The deposed president was wheeled into court on Saturday to hear the verdict in the case against him on charges of corruption and ordering the killing of protesters last year.Mubarak has become the only autocrat toppled in the Arab Spring to be put in the dock.
At the start of the trial’s session, Chief Judge Ahmed Rifaat criticized Mubarak’s three-decade rule and hailed the revolution that toppled him.
Rifaat also ordered families of those killed in the revolution to leave the courtroom, Al Arabiya’s correspondent reported.
The verdict was broadcasted live on Egyptian state television and other channels that agreed to buy its coverage.
The first several hearings the trial, which started in August, were broadcast live, but Judge Rifaat then ordered cameras out before witnesses began to take the stand.
His sons
Mubarak, his sons and business associate Hussein Salem, who fled to Spain, were also on trial over an alleged bribe. 
And the former president was also accused of selling natural gas to Israel at lower than market prices.
A security official said 5,000 policemen and 2,000 soldiers secured the area, to which Mubarak was be helicoptered in from a military hospital.
Mubarak has been detained in hospital since his arrest last year after the military, which took power after he resigned, appeared to bow to popular protests demanding that he and former regime officials be put on trial.
But the military insists the prosecution’s investigations and the charges eventually filed were independent judicial decisions.
However, critics say the investigations were hasty and sloppy, resulting in a trial based on patchwork evidence that may see Mubarak acquitted.
During the trial, Mubarak was wheeled into the lecture hall that serves as a courtroom on a stretcher. He reportedly suffers from a heart condition, but the health ministry has denied his lawyer’s claim that he has cancer.
Along with Adly, Mubarak’s co-defendants include six former police commanders.
All denied shooting orders
All the defendants had denied ordering police to shoot protesters or use deadly force during the uprising.
The verdict comes just two weeks before a run-off in presidential elections that will pit Mubarak’s former prime minister Ahmed Shafiq against the Muslim Brotherhood’s Mohammed Mursi in a highly polarizing race.
It is the first openly contested presidential election in any of the Arab countries swept by regional protests and uprisings that challenged decades of autocratic rule.
But the revolt also led to a deteriorating economy and increased lawlessness in Egypt, the Arab world’s most populous country, that has helped Shafiq, a symbol of Mubarak’s regime, win a surprising amount of support.