Insulting Islams prophet is punishable by death under Pakistani law, and blasphemy accusations stir such emotions that they are nearly impossible to defend against. Later on, in 2010, a court in district Nankana awarded her capital punishment, which was later challenged and upheld by a two-member bench of Lahore High Court in 2014. "The conviction and the sentence of death [are overturned]", said chief justice Saqib Nisar while announcing the verdict.
The allegations against Bibi were that she made three "defamatory and sarcastic" statements about the Holy Prophet on June 14, 2009 during an argument with three Muslim women while the four of them were picking fruit in a field in Sheikhupura.
She was later beaten up at her home, during which her accusers say she confessed to blasphemy.
Muslim women she was labouring with allegedly objected, saying that as a non-Muslim she was unfit to touch the water bowl.
Supporters of Islamist political party Tehreek-e-Labaik (TLP), which was founded to support Pakistan's harsh blasphemy laws, immediately condemned the ruling and blocked roads in Karachi, the country's largest city, and in the city of Lahore.
No one has ever been executed in Pakistan on blasphemy charges even though dozens have been jailed or extrajudicially killed, at times, in mob lynchings.
Paramilitary troops deployed in Islamabad to prevent protesters from reaching the Supreme Court, where security for the judges was being beefed up.
Tahir Khalil Singh, one of Asia Bibi's lawyers, told Premier: "I am so satisfied".
Rights groups say the blasphemy law is exploited by religious extremists as well as ordinary Pakistanis to settle personal scores.
Pakistan's 295-C blasphemy law is based on sharia (Islamic law) which mandates execution for those found guilty of committing blasphemy against Mohammed.
Salman Taseer, a prominent businessman and governor of the Punjab province, who had supported Bibi and called for blasphemy law reforms, was shot dead by his own guard in 2011.
Bibi, 54, has been on death row since 2010 after being accused of insulting Islam's Prophet Muhammed.
The Vatican had also appealed and called for the release of Ms Bibi, and Pope Francis met with her husband, Ashiq Masih, and daughter earlier this year.
Mumtaz Qadri was hanged for the killing but has been hailed a martyr by hardliners.
"The message must go out that the blasphemy laws will no longer be used to persecute the country's most vulnerable minorities", he said.