The 31-year-old, captain of European champions Chelsea, who earns a reported 150,000 pounds a week, was in Westminster Magistrates' Court to hear chief magistrate Howard Riddle read his verdict after a five-day trial.
An exchange of foul language between the players during a Premier League game last October triggered the resignation in February of England's Italian manager Fabio Capello after the Football Association (FA) decided to strip Terry of the captain's armband for Euro 2012.
Terry denied committing a racially aggravated public order offence when he had an expletive-littered exchange with Ferdinand on the field of play when Chelsea visited Queens Park Rangers' Loftus Road ground.
In evidence, he admitted using the highly offensive words, but maintained he was sarcastically repeating what Ferdinand mistakenly thought he had said.
OFFENSIVE WORDS
Explaining his verdict, Mr Riddle said the prosecution presented a strong case and said there was no doubt about the offensive words Terry used towards Ferdinand.
But, in summing up, he said: "Even with all the help the court has received from television footage, expert lip readers, witnesses and indeed counsel, it is impossible to be sure exactly what were the words spoken by Mr Terry at the relevant time.
"It is impossible to be sure exactly what was said to him at the relevant time by Mr Ferdinand. It is not only that all of this happened in a matter of seconds.
"They are professional footballers in the final minutes of a game where the result mattered to them both. They would naturally concentrate on the game more than on exactly what had been said to them or by them.
"There was the noise of the crowd. There is the fact that towards the end of a game players are not only physically tired, they are also mentally tired. I don't need evidence to tell me that.
"It is a crucial fact that nobody has given evidence that they heard what Mr Terry said or more importantly how he said it.
"He has given effectively the same account throughout. Insofar as there are discrepancies in his account, they are understandable and natural."
"In those circumstances, there being a doubt, the only verdict the court can record is one of not guilty."
During cross-examination, Ferdinand agreed he had sworn at players in the past and been on the receiving end himself.
He said he was angry at Terry seeking a penalty call and there had been some barging on the pitch.
He had also alluded to an alleged affair between the Chelsea player and the ex-girlfriend of former England team mate Wayne Bridge.
LOST CAPTAINCY
Terry had been stripped of the England captaincy before the 2010 World Cup following those allegations.
Alison Saunders, the Chief Crown Prosecutor for London said in a statement: "The very serious allegation at the heart of this case was one of
