She was accused of slashing her daughter's throat with nail scissors to make it look like a dingo attack and was sentenced to life in prison with hard labour in 1982.
She was three years into her sentence when evidence was found that backed up her version of events, including the baby's jacket, found near a dingo den, which helped explain the condition of the rest of the baby's clothing.
A Royal Commission debunked much of the forensic evidence used at trial and her conviction was overturned in 1988.
She and her ex-husband, Michael Chamberlain, were in court in the northern city of Darwin to hear the finding.
"No longer will Australia be able to say that Dingo's are not dangerous and only attack when provoked. We live in a beautiful country but it is dangerous and we would ask all Australians to be aware of this," said Ms Chamberlain-Creighton after the hearing.
Mr Chamberlain said the ruling showed "that you can get justice even when you think that all is lost".
"I cannot express strongly enough how important it is to pursue a just cause even when it seems to be a mission impossible," he said.
The incident inspired the film A Cry in The Dark, starring Meryl Streep.