He was originally ordered to serve 18 months in military detention after pleading guilty in November 2012.
But this was overturned on appeal on the basis that he had been placed under "improper pressure" to plead guilty.
Nightingale, a father of two, said he had suffered a brain injury during a charity endurance marathon in October 2009 and could not remember having the gun or the ammunition.
He won the right to a retrial earlier this year after having his detention reduced to a 12 months' suspended sentence.
Speaking after the verdict, Nightingale said it was a "bit of a David and Goliath battle" and thanked everyone who had supported him.
He said: "We need that support more than ever now."
Nightingale, who it was announced last month will be medically discharged from the Army, said he was considering what to do next.
'Gaps in memory'His retrial at Bulford in Wiltshire heard that Nightingale had originally told police in 2011 he had been given the pistol while on a tour of duty in Iraq in 2007 and had brought it back to the UK in his kit.
However, giving evidence in court, the soldier said that confession was false because of his memory problems.
He said he had been filling in the gaps in his memory based on what other people had told him following his brain injury, although the court heard medical opinion on this issue was divided.
Following his original detention, his case was raised in the Houses of Parliament and 100,000 people signed a petition calling for Nightingale to be freed.
The Court of Appeal later quashed his original convictions and a fresh trial was ordered.
At the Bulford hearing sentencing was adjourned by Judge Advocate General Jeff Blackett pending a Court of Appeal judgment on the sentencing powers of the court.
Nightingale was told by the judge he would be bailed until that date.
The soldier replied: "I understand, Your Honour."
The soldier had said he was given the gun as a present by Iraqis he had worked withThe court martial, which began last week, heard how West Mercia Police had found the gun and ammunition in a rented house near the SAS headquarters in Hereford that Nightingale shared with another soldier, referred to in court as Soldier N.
Police were acting on a tip-off from Soldier N's estranged wife, who told them there might be a gun stored at the house.
The Glock pistol was found in Nightingale's wardrobe, while the ammunition was under his bed in a plastic box.
William Clegg QC, defending, suggested Soldier N had brought two Glock pistols back to the UK from Iraq.
Soldier N was subsequently sentenced to two years' military detention after he admitted possessing a Glock which he brought back from Iraq in 2003.
He also pleaded guilty to possessing ammunition that was recovered by police at the house the two soldiers shared.
Mr Clegg said Soldier N had disassociated himself from the second pistol as having two would have looked like he was collecting them.
Prosecutor Timothy Cray told the five-person military board that "no soldier, no matter what his experience is or what unit he is attached to, is above the law".
He said Nightingale had made a "series of mistakes that put the public at risk".
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