Head judge Stefan Wikmark argued in favour of a conviction but was overruled by the panel of lay judges.
The prosecutor is expected to appeal the verdict.
The man, formerly a member of a Gothenburg anti-vice squad, was accused by ex-girlfriend Rosinha Sambo of trying to earn money by selling her sexual services from his bedroom.
This was not the first time that the prostitute and the policeman met in court. After their first period together in 2002, Sambo accused him of beating and threatening her.
He won the case, first in the district court, then in the appeals court. Later, when the dust had settled, they got back together again.
After they had gone their separate ways a second time Sambo claimed that she had received her customers in the policeman's bedroom while he was out. In return she paid him a monthly lump sum out of her income from prostitution.
"He gave me many hopes for the future. If I have feelings for a man then I don't want to have sex with others. But he wanted me to have sex with customers in front of him," said Sambo when testifying at last week's hearing.
The policeman denied exploiting Sambo's prostitution for financial gain. He claimed not to have been aware that she was operating from his bedroom, despite admitting to joining in on one occasion when Sambo was having sex with a customer.
"That's how she wanted it and I went along," he said.
He also denied Sambo's accusation that he regularly stood behind a wardrobe watching while she had sex with customers.
She claims that their relationship finally came to an end with her breaking the windows of his car and screaming that she was sick of having sex while he stood there masturbating, Göteborgs-Posten reports.