Kelly Phelps, a legal expert from the University of Cape Town said the public outcry over the case did not mean Judge Traverso's ruling was unfair. The judge's detailed ruling, read over three hours, was carefully considered, she said.
"The fault here lies with the preparation of the state's case, not the judge's handling of the case," said Phelps.
Judge Traverso said "the evidence presented in this case falls far below" the threshold needed for a conviction so she found Dewani not guilty.
The British businessman promptly descended stairs leading out of the courtroom but remained in custody until all the documents to free him were ready.
Members of the Dewani family burst into tears at the verdict, embracing each other, according to the British Press Association.
Anni Dewani's family bowed their heads amid shouting from the public gallery.
"With the ending of the case against Shrien Dewani today, our family who are in Cape Town, return home with more questions than answers and sleepless nights for the rest of our lives," Ashok Hindocha, Anni Dewani's uncle, said in a statement.
South Africa's prosecuting authority said it still believes that Dewani orchestrated his wife's murder.
"It is unfortunate that Mr. Dewani has been acquitted because we believe that he was involved," said Nathi Mncube, the prosecution's spokesman. "The court did not find that he was innocent. The court said it could not rely on the evidence given by three witnesses who themselves had been convicted of the crime."
Mncube denied that the case had collapsed because of a "shoddy police investigation."
The state's key witness, Zola Tongo, said Dewani paid him to hire two men to carry out the murder. Judge Traverso said the evidence given by the men who have already been convicted for the murder, was riddled with inconsistencies. The judge revoked the indemnity of a third man, a hotel receptionist who turned state witness after he was implicated in the murder.
"There were so many lies, mistakes and inconsistencies, that one simply cannot know where the lies end and where the truth begins," said Traverso, who delivered the ruling after deliberating for two weeks on the defense's application to dismiss the case. "There is no evidence upon which a reasonable court, acting carefully, can convict the accused."
In a statement read out to the court, Dewani said he is bisexual and frequented gay websites. The Hindocha family said Anni would not have married him "if she had known about his secret sex life."
"We will now go through this case with our lawyers to confirm whether we can file a lawsuit against Shrien Dewani in the U.K.," Ashok Hindocha said in a statement.