"I feel vindicated," she told reporters outside court.
Mtetwa said her arrest and subsequent trial was a "set up" to prevent her from representing her clients ahead of disputed July elections won by Mugabe.
"They wanted to completely destabilize my practice," Mtetwa said.
When she was arrested in March Mtetwa was held in jail for eight nights, during which time police ignored a judge's order to release her. Her prolonged detention prompted protests from African and international legal groups.
Rights groups described Mtetwa's arrest as a sign of a heightened clampdown and intimidation of human rights lawyers before the elections.
Mtetwa denied any wrongdoing saying she merely asked police for a search warrant after they failed to show her one.
But the state alleged in court that she shouted "at the top of her voice," saying that what police were doing was "unconstitutional, illegal and unlawful."
State prosecutors claimed Mtetwa insulted the police officers calling them "imbwa dzaMugabe," which means "Mugabe's dogs" in the local Shona language and "confused cockroaches."
Defense lawyer Harrison Nkomo said those allegations were trumped up against Mtetwa.
Nkomo told reporters the "state knew all along that she was innocent."
Global rights watchdog Amnesty International in a report titled "Zimbabwe: Agenda for The Government 2013-2018," released Monday said the Zimbabwe government has failed to respect human and democratic rights guaranteed in the nation's new constitution.
Amnesty's report said despite the new charter the Mugabe government has continued intimidation and arbitrary arrests of civic rights groups and activists as well as those viewed to be critical of the ruling ZANU-PF party.
Many were unlawfully detained on spurious criminal charges and made to spend long periods in jail waiting to appear in court after being unreasonably denied bail, said Amnesty.
"In all the cases documented, the activists were acquitted or the state abandoned the cases, or the cases are pending," the report said.
In her ruling Tuesday, Magistrate Mugwagwa said the police had Mtetwa in handcuffs and therefore she couldn't have interfered with their search.
"From the testimonies of state witnesses, there is no evidence she (Mtetwa) obstructed their duties" she said.
Mtetwa is the recipient of an array of awards from international jurists' groups including the American Bar Association and the Committee to Protect Journalists for a distinguished career of three decades.
She has represented Tsvangirai, Mugabe's main opponent, and several human rights defenders and journalists.
