The International Criminal Tribunal for the Former Yugoslavia found a co-defendant, a police officer who led the attack on Ljuboten, guilty of murdering three villagers and sentenced him to 12 years in prison.
Ex-minister Ljube Boskovski had been charged with failure to take measures to punish police officers who ravaged the village, setting houses on fire, and torturing and killing residents. The court said prosecutors had failed to substantiate the charges.
Apart from three murders, former police officer Johan Tarculovsky was convicted of planning the operation, giving orders, destroying the property of 12 ethnic Albanians and cruel treatment of 23 Albanian civilians.
The court said Tarculovsky had acted on orders from superiors, but their identities had not been established.
The attack is the only war crimes case examined by the UN tribunal in relation to Macedonia, which broke away from Yugoslavia in 1991.
The Hague-based tribunal, which has convicted 161 people for crimes committed during the bloody breakup of Yugoslavia, is due to close down by 2010.