Kudiratu Abiola was married to Moshood Abiola, the wealthy businessman-turned-politician who most believe won Nigeria's 1993 presidential election.
That vote was subsequently annulled by the country's military regime, sparking major protests.
In a keenly followed case, Hamza al-Mustapha, Abacha's chief security aide, was sentenced to hang last year over his role in Abiola's killing, but in a unanimous ruling, a three-judge appeals court threw out the conviction.
The lower court "did not evaluate the evidence placed before it as the court was out to convict the appellant (Al-Mustapha) at all costs," Judge Rita Pemu said.
Abacha, then an army general, seized power in the aftermath of the cancelled 1993 poll and ran the country until his death in 1998. His regime was seen as brutal and reviled by many.
Abacha had allegedly set up a so-called "strike force", which hunted down his opponents, a number of whom were shot dead or killed, while others fled the country. Mustapha was implicated in these alleged political attacks.
Abiola was shot dead in Lagos on June 4, 1996, while her politician husband was in prison.
A former Abiola family aide, Lateef Sofolahan, who was convicted alongside Mustapha last year for the killing, was also freed by the appeals court.
The case was initially filed in 1999, but experienced repeated delays.
It was not clear if the prosecution would take the case to the Supreme Court.
Moshood Abiola died in jail a month after Abacha's July 1998 death.
Nigeria, Africa's most populous nation and largest oil producer, returned to civilian rule in 1999.
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