Nawaz Shrif was earlier found was found guilty for hijacking General Pervez Musharraf's plane in 1999. Sharif had insisted that the ban was politically motivated.
"Looking at the case from any angle - the charge of hijacking, attempt to hijack or terrorism - does not stand established against the petitioner," the news agency quoted from the Supreme Court ruling.
The order said, "The conviction and sentence of the appellant are set aside and he is acquitted, petitioner had neither used force nor ordered its use and undisputedly no deceitful means were used."
PML-N spokesman Siddique-ul-Farooq said, "A judgement given by a kangaroo court nine years ago has been nullified by an independent and sovereign apex court in the light of the constitution, law and evidence on record."
Earlier, in May 2008 the Supreme Court had overturned a ban that prevented Mr Sharif and his brother Shahbaz from running for political office.