She broke down in tears last night as an Italian appeal court cleared her and her former boyfriend Raffaele Sollecito of murdering Ms Kercher.
The judgment, which was beamed around the world from the courthouse in Perugia, frees the 24-year-old American to return home after four years in an Italian jail.
Hundreds of people who had gathered in the streets outside the Italian court jeered and shouted "shame" when they heard about the decision to free Ms Knox.
The ruling comes almost four years on from the murder of the Leeds University student in the city.
And while the prosecution are free to appeal the quashing of the verdict against Knox, they will now have to seek permission from the US to extradite her back to Italy for any future trial.
The court quashed a 26-year jail sentence for Ms Knox, and a 25-year sentence against Mr Sollecito, after independent forensic investigators sharply criticised police evidence in the case, saying it was unreliable.
The case had been built on hotly-contested DNA evidence found on a knife at the flat that Ms Knox – christened 'Foxy Knoxy' by the world's media – shared in the university town of Perugia.
After the decision, Ms Knox left the court in floods of tears, followed shortly afterward by members of her family, who have mounted a high-profile publicity campaign in the US and Italy against her conviction. Outside the court they smiled and hugged each other.
In a statement outside the court, Ms Knox's sister Deanna, flanked by other family members, said they were "thankful that Amanda's nightmare is over". Mr Sollecito's father Francesco said he had "allowed himself some tears" and maintained his son had "nothing to do with the death of Meredith Kercher".
Ms Kercher's brother Lyle and sister Stephanie comforted each other as they remained seated in the courtroom with their mother Arline. Mrs Kercher left court without commenting.
Knox and Sollecito were convicted in 2009 of stabbing 21-year-old Ms Kercher, Knox's flatmate from Coulsden, Surrey, after forcing her into a violent sex game.
The semi-naked body of the exchange student was found on November 2, 2007.
But Ms Knox, from Seattle, has always protested her innocence and in an emotional plea to the packed courtroom hours before the verdict told how she was "paying with her life" for the death of her friend.
Speaking in fluent Italian, the American said: "I did not kill, I did not rape, I did not steal. I was not there."
Ms Kercher's throat had been slashed and she had been sexually assaulted.
Small-time drug dealer Rudy Guede, 24, from the Ivory Coast, was jailed for the murder and sexual violence after separate proceedings. His conviction was subsequently upheld on appeal.
As part of her acquittal Ms Knox was told to pay €22,000 in compensation to Diya "Patrick" Lumumba, a local barman she falsely accused of the murder.
Once back in the US, it is expected American authorities will refuse any attempt to extradite Ms Knox back to Italy.
