"There being a doubt, the only verdict the court can record is one of not guilty," said Chief Magistrate Howard Riddle in the packed London courtroom.
Terry, who was widely seen as one of England's best players in this summer's European Championship, sat impassively in the courtroom as the verdict was given, the Telegraph writes.
"The court has today acquitted John Terry of all charges," his lawyer, Dan Morrison, said outside, after Terry hurried past the media throng into a waiting car.
"He did not racially abuse Anton Ferdinand, and the court has accepted this." he added.
Chelsea Football Club's chairman, Bruce Buck, also welcomed the verdict. "We at Chelsea are pleased that John Terry can now put his mind back to football."
At least for now. The English Football Association, which could still open its own disciplinary proceedings against Terry, said it noted the court's verdict and would "now seek to conclude its own inquiries," CNN reports.
The Football Association stripped the 31-year-old Chelsea defender of his England captaincy after a preliminary court hearing on the racism charge in February, leading Fabio Capello to quit as manager, believing his authority had been undermined, Sports Illustrated writes.
Alison Saunders, London's Chief Prosecutor, in a press release said: "The very serious allegation at the heart of this case was one of racial abuse. It was our view that this was not "banter" on the football pitch and that the allegation should be judged by a court."
The Crown Prosecution Service (CPS) is the government department responsible for prosecuting criminal cases investigated by the police in England and Wales.
"The Chief Magistrate agreed that Mr Terry had a case to answer, but having heard all of the evidence he acquitted Mr Terry of a racially aggravated offense. That is justice being done and we respect the Chief Magistrate's decision."
Although the verdict was greeted with cheers in the public gallery, not everyone joined in.
"John Terry verdict is a travesty," tweeted former basketball player John Amaechi. "Thanks football - you set entire country back a decade. 'Black c*nt' now officially ok to say. #racism"
"It would have been a crime if the man was found guilty. Are they going to send people to prison for the way they see and feel things?" asks a YouTube user.
Another user writes: "Too many black people have become waaay too sensitive to racial slurs."
In his 15 page written judgement, Riddle carefully explained how he came to his decision. The case centers around an incident during a heated match on October 23, 2011:
There was an initial dispute between the defendant, John Terry (Chelsea) and Queens Park Rangers defender Anton Ferdinand (QPR), inside the QPR penalty box. Shortly afterwards Mr Terry returned to the Chelsea half of the pitch and turned to face the opposition. At that stage Mr Ferdinand made what was described as a fist pumping gesture towards the defendant.
Ferdinand then taunted Terry over an 2010 alleged affair he had with lingerie model Vanessa Perroncel, the former girlfriend of his England team-mate Wayne Bridge.
In response, the married Chelsea captain, who was voted Dad of the Year in 2009, allegedly shot back with "f------ black c---".
Terry never denied that he used the words, “f**k off, f**k off”, “f**king black c*nt” or “f**king knobhead” in the confrontation. What he did deny was the intent: the words were not meant to be abusive or insulting, the ruling said.
Terry said that he repeated the words to Ferdinand in order to counter what he believed the QPR player was accusing him of saying. He was "rhetorically responding."
Chelsea defender Ashley Cole
"If I repeated something that I thought you said, that's totally different than if someone just says something," Chelsea defender Ashley Cole told the court on behalf his team captain.
According to CPS, Racially aggravated offenses are offenses where the offender shows or is driven by racial hostility. The details of the charge are:
In this case, Terry was charged with using threatening, abusive or insulting words or behavior, or disorderly behavior within the hearing or sight of a person likely to be caused harassment, alarm or distress which was racially aggravated. (incident Footage below)
"There is no doubt that John Terry uttered the words “f**king black c*nt” at Anton Ferdinand," the judge continued. "When he did so he was angry. Mr Ferdinand says that he did not precipitate this comment by himself accusing Mr Terry of calling him a black cunt."
The judge also took into account an interview the prosecution said pointed to Terry's guilt. In the FA interview,
Mr Terry was asked “can you remember exactly what you said back to him?” and replied [page 65] “I think it was something along the lines of, “You black cunt, you’re a fucking knobhead”. The Crown say that this represents a true statement. It was a slip by Mr Terry. It is evidence of his guilt. Certainly it is a very significant statement. It may well represent the truth. On the other hand it is qualified by the words “I think it was something along the lines of” and followed by the words “so I’m repeating, basically, what he’s said to me, or what I think he is said to me.”The verdict
"In all criminal courts in this country a defendant is found guilty only if the court, be it a jury, magistrate, or a judge, is sure of guilt," according to court documents. "If there is a reasonable doubt then the defendant is entitled to be acquitted."
Riddle had doubt. He said it was a crucial fact that no one heard how Terry said the words at the time.
"Weighing all the evidence together," the judge said. "I think it is highly unlikely that Mr Ferdinand accused Mr Terry on the pitch of calling him a black c**t. However I accept that it is possible that Mr Terry believed at the time, and believes now, that such an accusation was made."
"It is therefore possible that what he said was not intended as an insult, but rather as a challenge to what he believed had been said to him.
"In those circumstances, there being a doubt, the only verdict the court can record is one of not guilty," the judge said.
A culture of racism
This verdict comes as English soccer officials fight to stamp racism out of the sport. "This trial was not just about what one player said to another," BBC sports news correspondent Dan Roan writes.
Roan added: "It was seen as a landmark case around the national sport's efforts to improve race relations, tolerance and respect, raising serious questions over what is deemed acceptable behavior on the field of play."
As the New York Times noted, racism has been a persistent problem in professional soccer, in Britain and abroad, and the charges against Mr. Terry were intended to demonstrate how seriously law-enforcement officers take the matter.
The FA suspended Liverpool’s Luis Suarez for eight games last December after he was found to have repeatedly called Manchester United’s Patrice Evra “negro”.
It's not just the players of the sport, but the fans, too.
On the day John Terry was stripped of his captaincy, the AP reported, Howard Hobson, 57, a Manchester United fan was charged for shouting racist abuse at Stoke players during a Premier League game.