Jurors at Teesside Crown Court found him not guilty of the offence but are still considering an alternative charge of assault by beating.
Gascoigne, known as Gazza, denies both offences.
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The 52-year-old former England midfielder admitted kissing a woman but claimed it was not a sexual act. He claimed it was to boost her confidence after he heard someone call her fat.
Jurors heard that the complainant was on train travelling between York and Newcastle train in August 2018 when Gascoigne sat down next to her, tapped her on the arm and kissed her.
Gascoigne wept in the dock as he was cleared of sexual assault.
The trial continues.