A High Court in Harare on Monday overturned Dangarembga's verdict, saying it was erroneously reached, with the judge adding the full reasoning behind the decision would be released at a later stage.
"No offence was committed in the first place. The judges said she did not commit any offence," Dangarembga's lawyer Harrison Nkomo told AFP after the ruling.
The 64-year-old was arrested in July 2020 as she walked the empty streets of Harare during the coronavirus lockdown with a friend - journalist Julie Barnes - and a handful of other demonstrators.
Dangarembga held a placard reading "We want better - reform our institutions".
She also wore a sign on her back calling for the release of a prominent journalist who had previously been arrested on similar charges of inciting violence.
Authorities alleged the demonstration had not been authorized and was aimed at inciting violence, while the author contended she spoke to no one during the walk.
Barnes, who was jointly charged with Dangarembga, was also acquitted on appeal.
Musa Kika, the head of a coalition of rights groups, the Zimbabwe Human Rights NGO Forum, welcomed the ruling saying it "corrected a wrong."
"This must get us to reflect on why the lower court got it wrong in the first place, and confront the now common desire, drive and motivation of the magistrates court to convict opposition and pro-democracy activists," he said.
Arbitrary arrests and repression against civil rights organizations have hardened under the presidency of Emmerson Mnangagwa, who succeeded Robert Mugabe in 2017.
Rights groups and the opposition say the crackdown has intensified ahead of national elections - which are to be held in August, although no date has been announced yet - accusing the government of using the courts to silence dissent.
Dangarembga's 1988 novel "Nervous Conditions" was the first book to be published in English by a black woman from Zimbabwe and earned her the prestigious Commonwealth Writers' Prize.
