The basic question the jury had to decide was whether Garcia Zarate intentionally and willfully fired the single shot that killed Kate Steinle.
Zarate, of Mexico, had been deported several times and has previous convictions for re-entry after deportation.
Conservative pundit Ann Coulter said Steinle "would still be alive if we had a wall", referring to President Trump's call for the construction of a border wall between the USA and Mexico.
President Trump later signed an executive order to cut funding from cities that limit cooperation with USA immigration authorities, a policy that a federal judge in San Francisco permanently blocked Monday. But Zarate's defense attorney contended the shooting was accidental.
But one of the defendant's lawyers said the debate over immigration didn't belong in the case.More news: Gators make splash hire with Dan Mullen
A spokesman for the San Francisco district attorney, Alex Bastian, says the acquittal of a Mexican man in a high-profile killing was not the verdict they had hoped for, but that prosecutors would respect the jury's decision.
Jurors did find him guilty of being a felon in possession of a firearm, meaning he knowingly had a firearm but there was no intent for him to hurt or shoot anyone.
Since taking office, President Donald Trump's administration has tightened immigration enforcement and warned sanctuary cities they could lose funding if they refuse to cooperate with federal authorities.
Prosecutor Diana Garcia had argued the shooting was a deliberate act, while defense attorneys Matt Gonzalez and Francisco Ugarte described it as an accident, occurring after Garcia Zarate picked up a gun he found on the pier.
Trump has said that Steinle's death, just two weeks after he launched his presidential campaign, is emblematic of the problems in the US immigration system, particularly the continued existence of sanctuary cities where local officials refuse to cooperate with federal immigration officials.More news: Kremlin comments on senator's detention in France
MCEVERS: Do you think this will have any impact on San Francisco or other sanctuary cities in how they deal with these cases in the future?
But he told jurors that Garcia Zarate had no motivation to kill Steinle and that as very bad as her death was, "nothing you do is going to fix that". The maximum sentence he faces is three years, according to a detailed report on the outcome from Vivian Ho at the San Francisco Chronicle.
"While the State of California sought a murder charge for the man who caused Ms. Steinle's death - a man who would not have been on the streets of San Francisco if the city simply honored an ICE detainer - the people ultimately convicted him of being a felon in possession of a firearm", Sessions said.
In his acceptance speech at the Republican National Convention, Trump tried to link Democrat Hillary Clinton to the controversy.
Steinle, her father and a friend were at the pier when a bullet struck Steinle's lower back and tore through her abdominal aorta, authorities said. But it's unlikely to have enough votes to pass the Senate, which struggled with Kate's Law past year.More news: Why Trump stands by Roy Moore, even as it fractures his party