A three-member bench headed by Chief Justice of Pakistan (CJP) Justice Saqib Nisar and comprising Justice Mazhar Alam Khan Miankhel and Justice Asif Saeed Khosa heard the case during which, Asia's appeal against her execution was approved.
He said: "The appeal is allowed. She is acquitted of all charges and if not required for any other charges she will be released forthwith".
Pakistani lawyers who are contesting the case against Asia Bibi, a Pakistani Christian woman convicted of blasphemy, speaks to media outside the Supreme court, in Islamabad, Pakistan, on October 31, 2018.
Bibi was set to be released immediately according to the court, although there was no word if any security arrangements were being made for her protection.
Bibi's plight drew the attention of global rights groups and quickly evolved into the most high-profile case in the country, with Pope Benedict XVI calling for her release in 2010.
Asia Bibi, a mother of four, has been living on death row since 2010 when she became the first woman to be sentenced to death by hanging under Pakistan's blasphemy laws.
She had angered fellow Muslim farm workers by taking a sip of water from a cup she had fetched for them on a hot day.
Bibi was accused by two Muslim women of having committed blasphemy during an argument sparked by their refusal to drink water from the same vessel as her in 2009. "We knew that she is innocent", said Ashiq Masih.
"The patron in chief of TLP, Muhammad Afzal Qadri, has issued the edict that says the chief justice and all those who ordered the release of Asia deserve death", said party spokesperson Ejaz Ashrafi.
It has been a case of high-tension from the outset, with Salman Taseer, a Punjabi governor who supported Ms Bibi, gunned down in broad daylight by his bodyguard in Islamabad in 2011.
Rights groups say the blasphemy law has been used to settle scores and to persecute religious minorities, and have pressed for stricter punishments for false accusations.
Demonstrations broke out in major cities across the country following the verdict, with approximately a thousand club-wielding demonstrators blocking Islamabad's main highway as several roads in the port city of Karachi were barricaded by protesters sparking chaotic traffic jams.
"Religious clerics ... who addressed the rallies in these towns vowed to continue their protests until the Supreme Court delivers its judgment and to oppose any attempt to amend Pakistan's blasphemy laws", Ahmad wrote.
Other prisoners freed on blasphemy charges have been murdered by Islamic extremists. Pakistan's minister for minorities, Shahbaz Bhatti, was assassinated later that year after demanding justice for Bibi. What did your Prophet Muhammad ever do to save mankind? Her whereabouts has been kept secret for security reasons.