Neither Gotovina nor Markač showed any emotion when the ruling was pronounced, but their supporters in the court's gallery hugged one another, cheered and clapped after the verdict. Three of the appellate panel's five judges voted to overturn the convictions.
In Zagreb and other cities, thousands of people were celebrating, as Gotovina is seen as a national hero in the former Yugoslav republic that is due to become the EU's 28th member next year.
Like Gotovina, a former general, Markač, a former senior police official, was one of the main leaders of the 1995 “Operation Storm” (see background).
In 2011, Gotovina and Markač were sentenced by the International Criminal Tribunal for the former Yugoslavia (ICTY) to 24 and 18 years respectively, for crimes including murder and forced deportation. Judges ruled both men were part of a criminal conspiracy led by former Croatian President Franjo Tudjman to expel Serbs.
Gotovina was arrested in the Spanish Canary Islands in December 2005. Croatia's EU membership bid suffered extended delay due to the failure to arrest Gotovina.
Former Croatian Prime Minister Jadranka Kosor last year raised eyebrows at an anniversary of Operation Storm because she praised Gotovina and Markač for their work in that operation.
The decision of The Hague tribunal is likely to make waves in Serbia, where many consider Gotovina and Markač responsible for genocide.