The former Vatican treasurer, 78, was the most senior Catholic figure ever jailed for such crimes.
In 2018, a jury found he abused two boys in Melbourne in the 1990s.
But the High Court of Australia quashed that verdict on Tuesday, bringing an immediate end to Cardinal Pell’s six-year jail sentence.
The Australian cleric had maintained his innocence since he was charged by police in June 2017.
His case rocked the Catholic Church, where he had been one of the Pope’s most senior advisers.
A full bench of seven judges ruled unanimously in Cardinal Pell’s favour, finding the jury had not properly considered all the evidence presented at the trial.
It was the cardinal’s final legal challenge, after his conviction was upheld by a lower court last year.
“I have consistently maintained my innocence while suffering from a serious injustice,” Cardinal Pell said in a statement after the decision. He had served more than 400 days of his sentence and cannot be retried on the charges.
He was released from Victoria’s Barwon Prison shortly after midday local time (02:00 GMT) and driven to a Carmelite Monastery in Melbourne, local media said.
Source: BBC