The Lahore High Court's Rawalpindi bench overturned the 2004 decision of the ATC which had handed down death penalty to Fazal Mohammad, Tahir Mehmood, Hafiz Naseer and Habibullah.
At least 19 people were killed and 35 others injured in the suicide attack at Shah-i-Najaf Imambargah in Rawalpindi in 2002.
A two-member bench of the LHC, comprising Justice Ibadur Rehman Lodhi and Justice Qazi Muhammad Amin, heard the case wherein the defendants pleaded not guilty. The court acquitted them due to lack of evidence.
Pakistan ended its six-years-old moratorium on the death penalty in terror cases last month after the horrific terror attack on an army-run school in Peshawar killed 150 people, mostly children.
Seven convicts have been hanged so far after the Nawaz Sharif-led government lifted the moratorium.