Julius Malema was charged in 2012 with money laundering, racketeering and corruption related to a government contract worth $4m.
He denied the charges, and said they were politically motivated.
Malema formed the Economic Freedom Fighters (EFF) party in 2013 following his expulsion from the governing African National Congress (ANC).
He is a fierce critic of President Jacob Zuma, and has campaigned against corruption.
Correspondents say the ruling is a big boost for Mr Malema’s career, and will fuel perceptions that he is the victim of an abuse of power.
However, he added, the defendant not been formally acquitted, so prosecutors could still charge him again.