Jose Ines Garcia Zarate -- who had been deported five times from US soil -- was charged with fatally shooting Kathryn Steinle, 32, in July 2015 in San Francisco.
His attorneys yesterday argued that the gun went off by accident.
After several days of deliberations, jurors only found him guilty of felony possession of a weapon.
Trump was quick to denounce the verdict, and immigration authorities said they would work to see Garcia deported.
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During the heated 2016 race for the White House, Trump regularly used the case to justify his proposed construction of a massive wall on the border with Mexico, and to rally support behind his hardline stance on immigration.
Speaking to CNN last year, Trump dubbed Garcia an "animal," saying: "Mexico pushes back people across the border that are criminals, that are drug dealers."
The divisive case reignited debate over cooperation between federal immigration authorities and police in state and local jurisdictions where the priority is crime prevention, not deportation.
Such cities protect undocumented immigrants from deportation by refusing to assist or cooperate with federal immigration officials.
After the verdict, Attorney General Jeff Sessions -- who maintains an ultra-conservative agenda on immigration -- skewered San Francisco's sanctuary city status, saying its "decision to protect criminal aliens led to the preventable and heartbreaking death of Kate Steinle."
The US Immigration and Customs Enforcement agency also said the California city's "policy of refusing to honor ICE detainers is a blatant threat to public safety and undermines the rule of law."
In an interview with the San Francisco Chronicle prior to the verdict's release, Steinle's family emphasised that they wanted simply to move out of the spotlight.
"We just want to get this over with and move on with our lives, and think about Kate on our terms. Nothing's been on our terms. It's been on everyone else's terms," said her father Jim Steinle.
"Even if this guy gets 100 years in prison, it doesn't solve anything; it doesn't help anything," he said.
"Justice was rendered, but it was not served," he said.
Public Defender Jeff Adachi said Garcia Zarate was "extremely relieved."
"He knew what was at stake -- his life was at stake," Adachi said of his office's client. "I think he feels tremendous sympathy for Kate Steinle and her family -- we do as well -- but unfortunately these types of horrible tragic accidents happen every day.