The pair faced up to 22 years in prison for the charges in the case that drew worldwide attention to the East African country. "This is the beginning, because there's still a lot that needs to be done in our country".
Diane Rwigara had earlier been barred from contesting the August 2017 presidential election by the country's electoral authority.
In Thursday's ruling, the high court judges said the prosecution failed to prove that Ms Rwigara had personally forged supporters' signatures and ruled that her criticism of the government during press conferences was protected by freedom of speech in both the constitution and worldwide law.
Diane Rwigara was also charged with "forging or adjustment of documents" and "use of counterfeited documents", while her mother, Adeline, faced an additional charge of "discrimination and sectarian practices".
US senators in recent days urged the Rwandan government to drop the charges against her.
The court also said Rwigara's criticism of the government in the press was an exercise of her freedom of expression, guaranteed by both the constitution and global law.
Some Rwandans in the capital, Kigali, said they were shocked by the court's decision. Umuhoza was convicted in 2013 for conspiring against the government.
Speaking to The Associated Press ahead of her court appearance, Rwigara remained defiant, saying no amount of pressure will silence her.
Rwigara, 37, was accused of forgery in relation to her unsuccessful attempt to run against the long-time president Paul Kagame. "I hope to be cleared of all these made-up charges but I am ready for any outcome", she said, calling the courts unpredictable and lacking independence.
Kagame is largely credited with the development and stability that Rwanda has experienced since the 1994 genocide in which 800,000 people were killed; he has also spearheaded gender equality, and 61% of parliamentarians are women. Amnesty International has called on the Rwandan judiciary to ensure that Diane Rwigara's trial does not become another means to persecute government critics.
A panel of three judges ruled that the prosecution had failed to prove that Rwigara had personally forged signatures. "There are still many political prisoners in the country", she told journalists after the high court ruling. Kagame won a third term with more than 98 percent of the vote.