Kyle Rittenhouse, 18, killed the men and wounded a third on the streets of Kenosha, Wisconsin, on 25 August 2020.
During the high profile and politically divisive trial, his defence said he had feared for his life. Prosecutors argued he was looking for trouble that night.
National Guard troops have been sent to the city amid fears of unrest.
US President Joe Biden called on people to "express their views peacefully", saying that while the outcome of the case "will leave many Americans feeling angry and concerned, myself included, we must acknowledge that the jury has spoken".
Mr Rittenhouse fatally shot Joseph Rosenbaum, 36, and Anthony Huber, 26, and then wounded 27-year-old Gaige Grosskreutz. Mr Rittenhouse and the men he shot are all white.
He faced five charges, including intentional homicide, which carries a life sentence.
His fate was decided by a 12-person jury made up of seven women and five men, who had spent more than three days deliberating.
The teenager began to shake with sobs and nearly collapsed as he heard the words "not guilty" read out five times.
Two nights before he turned up in Kenosha last year, riots had erupted on its streets after police shot Jacob Blake, a black man, leaving him paralysed.
Mr Rittenhouse, then aged 17, had travelled to the city from his home in Illinois. Armed with a semi-automatic rifle, he said he sought to help protect property from unrest.
During the trial, jurors were shown video, sometimes frame by frame, leading up to and after each shooting.
In their closing arguments, Mr Rittenhouse's lawyers argued that he was "trying to help this community" and "reacted to people attacking him". Prosecutors, meanwhile, questioned why he broke curfew in a city he did not live in and "pretended to guard" people and property he was not familiar with.
The case has become a flashpoint in the highly polarised debate over gun rights in the US.
Mr Rittenhouse is championed as a hero by those who say he tried to keep the peace in sometimes violent protests. Others were horrified by what they saw as a heavily armed teenage vigilante in a volatile setting.
BBC correspondent Nomia Iqbal, who was at the courthouse on Friday, said several cars drove past tooting their horns and shouting "Free Kyle" and "We love the second amendment", which covers the right to keep and bear arms.
On the court steps Jacob Blake's uncle was in tears and said he was shocked at the verdict.
Mr Huber's parents said there was "no accountability" for their son's killer.
"It sends the unacceptable message that armed civilians can show up in any town, incite violence, and then use the danger they have created to justify shooting people in the street," they said in a statement.
But Mr Rittenhouse's defence attorney Mark Richards said his client "wished none of this would have ever happened" and just wanted to get on with his life.
David Hancock, a spokesman for the Rittenhouse family, told CBS they had expected the acquittal, adding that they were now "in an undisclosed location".
Reactions from politicians on Friday highlighted divisions over the case.
Wisconsin Lieutenant Governor Mandela Barnes, a Democrat, was among those to denounce the verdict.
"Over the last few weeks, many dreaded the outcome we just witnessed," he was quoted by the Associated Press news agency as saying.
"The presumption of innocence until proven guilty is what we should expect from our judicial system, but that standard is not always applied equally. We have seen so many black and brown youth killed, only to be put on trial posthumously, while the innocence of Kyle Rittenhouse was virtually demanded by the judge."
New York Mayor Bill de Blasio went further, in a tweet describing the verdict as "disgusting".
But Republicans including Wisconsin Senator Ron Johnson welcomed the decision.
"Justice has been served," he said, quoted by AFP. "I hope everyone can accept the verdict, remain peaceful, and let the community of Kenosha heal and rebuild."
The state's former governor, Scott Walker, also tweeted his approval: "All of us who knew what actually happened in Kenosha last year assumed this would be the verdict. Thankfully, the jury thought the same."
In a brief statement, the office of the Kenosha County District Attorney - which handled the prosecution's case - said it respected the verdict and called for calm.
Wisconsin's Governor Tony Evers said it was "time to move forward, together".