Redknapp, tipped to be the next England manager, was charged with cheating the public revenue in relation to payments totalling $295,000 made to his bank account in Monaco during his time as Portsmouth manager.
After the verdict, Redknapp, one of the best known figures in English football, said the strain of the investigation had been "horrendous" as he fought back tears.
"It really has been a nightmare. I've got to be honest, it's been five years and this is a case that should never have come to court," he told reporters as he emerged on to the steps of Southwark Crown Court in London.
Redknapp, 64, applauded the Tottenham directors and supporters for their backing after he and the former Portsmouth chairman Milan Mandaric were cleared of wrongdoing.
"I have to thank the fans, especially, the fans of Tottenham. The other night, the Wigan game, was the most moving I've ever felt for me personally to have them singing my name throughout the game," he said.
The verdict clears the way for Redknapp to replace Fabio Capello as manager of the England team after the Euro 2012 tournament this summer when the Italian is due to step down.
Capello has clashed with the Football Association after they stripped John Terry of the England captaincy on Friday, prompting speculation the Italian could leave before Euro 2012.
Redknapp embraced co-defendant Mandaric and gasps went out from where their family was sitting as both were cleared after a trial lasting more than two weeks.
Mandaric, former chairman of Portsmouth, made the payments to an account named "Rosie 47" after Redknapp's dog. The two men said the payments were for investments outside of football and not bonuses on which tax was due.
Redknapp was manager of Portsmouth from 2002 to 2004 and then 2005 to 2008 before joining Spurs, who are third in the Premier League. Mandaric remains involved with football as chairman of League One Sheffield Wednesday.
Redknapp said Tottenham chairman Daniel Levy would never have employed him if he had thought there was any foundation to the allegations.
Tottenham welcomed a decision that should allow Redknapp to focus fully on his managerial duties.
"We are pleased to see this resolved and we all look forward to the rest of the season," the club said in a brief statement.
The investigation into Redknapp has its roots in a wider inquiry into allegations of corruption in the Premier League which has failed to yield any convictions.
The tax authorities defended their actions.
"We've no regrets about pursuing this case because it was vitally important that the facts were put before the jury for their consideration," said Chris Martin, Assistant Director of Criminal Investigations at HM Revenue and Customs.
"We accept the verdict of the jury but I would like to remind those who are evading tax by using off-shore tax havens that it always makes sense to come forward and talk to us before we come to talk to you."
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