The court said they had not violated laws on uniforms and public gatherings.
Prosecutors have now lodged an appeal.
The group of Salafists - ultra-conservative Muslims - included Sven Lau, a preacher whose passport was seized this year after he visited Syria and a photo surfaced, showing him posing on a tank, with a Kalashnikov rifle slung around his neck.
He is suspected of trying to recruit Muslims to join jihadists fighting in Syria or Iraq and has spent some time in prison previously. He said he had gone to war-torn Syria in 2013 on a humanitarian mission.
Salafist preacher Sven Lau - on a police watch-list - organised the "Sharia police" action
Sharia requires strict adherence to Islam, and bans gambling, alcohol and male-female socialising in places such as discos.
The group`s appearance at night in Wuppertal, in the industrial Ruhr region, triggered sharp criticism in Germany. A film of their "patrol" appeared on YouTube - but the action was condemned by the Central Council of Muslims in Germany, who said it was "harmful to Muslims".
The group also carried notices proclaiming in English a "Shariah Controlled Zone". The notices spelled out prohibitions like those in force in some Gulf Arab countries, outlawing alcohol, drugs, gambling, music and concerts, pornography and prostitution.
Activists in the anti-Islam Pegida movement - campaigning to stop immigration to Germany - demonstrated in Wuppertal last year. They have staged regular marches against "the Islamisation of Germany" nationwide.
