Mr Lai had denied the charge of "criminal intimidation" over a 2017 incident at a Tiananmen massacre vigil.
Last month police detained the democracy activist in a separate case under a controversial new security law.
He is also facing several other charges over last year's anti-government protests.
The 71-year-old's arrest in August sparked global condemnation of the escalating crackdown on dissent in Hong Kong.
He was led in handcuffs through his newsroom as more than 200 police officers raided the building in extraordinary scenes streamed live by his Apple Daily newspaper.
While the arrest shocked many in Hong Kong, it was welcomed by Chinese state media where he is denounced as a traitor.
The Global Times said Apple Daily had been "instigating hatred, spreading rumours and smearing Hong Kong authorities and the mainland for years".
The millionaire magnate arrived in Hong Kong as a stowaway on a fishing boat.
He swiftly worked his way up from sweatshops to make his fortune in the clothing industry before founding Apple Daily in 1995.
A paper that started off as a local tabloid grew into a standard bearer for the city's pro-democracy movement, unafraid to challenge leaders in Hong Kong and mainland China.
Mr Lai is one of the only tycoons in the territory who is openly critical of Beijing and he was a prominent supporter of the months-long reform protests that swept Hong Kong last year.
In June, when the national security law was imposed on the city by Beijing, Mr Lai told the BBC it "spells the death knell for Hong Kong".
Less than two months later he became the highest-profile figure to be detained under the legislation.
Speaking after his release on bail in August, Mr Lai said he believed his arrest was "just the beginning".
There will be "a long fight" ahead for Hong Kong's freedoms, he said.
The not-guilty verdict on Thursday is related to a 2017 clash with a reporter from Oriental Daily News, a newspaper viewed as pro-Beijing that is a fierce competitor to Apple Daily.
The fracas took place during an annual candlelight vigil to mark the 1989 Tiananmen Square crackdown in Beijing.
At trial the reporter testified that he had felt threatened when Mr Lai said he would "mess with" him after he photographed and filmed the businessman at the event, reported the South China Morning Post.
It added that in a video interview with police, played in court, Mr Lai said the reporter had been pursuing and photographing him for years before the 2017 encounter and he had felt provoked by the camera.
Police had spoken to Mr Lai about the incident in 2018 but the investigation did not continue.
Then in February he was arrested and charged with criminal intimidation.
On the same day he was also charged with illegal assembly related to a banned anti-government protest last year.
Mr Lai has been arrested several times since February.
In April he was among 15 pro-democracy activists and former lawmakers arrested over protests last year.
Then in August Mr Lai was charged with participating in June's Tiananmen vigil, along with at least 23 others. The annual gathering was banned in Hong Kong for the first time, with authorities citing coronavirus fears.
The most dramatic arrest came a few days later on 10 August in the largest police operation since the security law was passed.
Mr Lai and nine other activists, including Agnes Chow, were detained over allegations including "collusion with foreign forces".
If charged and convicted under the security law they could face up to life in jail.
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