Gascoigne, 52, who earned 57 caps for England between 1988 and 1998, was arrested on August 20, 2018 and charged on November 19 with allegedly sexually assaulting a woman on a train.
He entered a plea of not guilty at Peterlee Magistrates' Court in County Durham on December 11 last year, with the case coming to trial at Teesside Crown Court this week.
In judge Peter Armstrong's directions to the jury on Wednesday, he informed them they may consider an alternative offence of "assault by beating" if found not guilty of sexual assault following evidence and witness statements.
The jury returned verdicts of not guilty for both charges on Thursday.
His solicitor read a statement on behalf of Gascoigne outside the court, saying: "To have a sexual allegation hanging over me for over 12 months has been so tough.
"I'm so glad I was finally able to put over my side of the story and the jury came to the correct verdict."