Muhammad Mansha, 58, was arrested by police in September 2008 for allegedly desecrating pages of the Quran in Sadiqgunj area of Bahawalnagar district in Punjab province.
He was charged under Section 295-B of the Pakistan Penal Code (PPC) and awarded life imprisonment in 2009 by a district and sessions court. The sentence was also upheld by the Lahore High Court in 2014.
The convict appealed to the Supreme Court in 2014 and the court issued the verdict yesterday.
The judges observed that the witness was not competent to record evidence under the law.
Pakistan's controversial blasphemy law was enacted by military dictator Ziaul Haq in 1980s to appease clerics. The law has been under criticised by rights groups for its misuse aimed at settling personal scores and disputes.
Those accused of blasphemy are under imminent threat of being killed by extremists.
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