Within hours of his acquittal, England manager Fabio Capello stepped down from the job, four months before the start of the European Championships in Poland and Ukraine.
Even before Capello’s dramatic exit after a row with the Football Association for stripping John Terry of the team’s captaincy, bookmakers had slashed odds on Redknapp becoming the next England manager.
Redknapp, 64, has yet to say whether he would take the job but has long been tipped as the most likely successor.
The Tottenham Hotspur boss said the case should never have reached trial after jurors accepted his angry denials of tax dodging on £189,000 in a Monaco account.
His acquittal alongside co-defendant Milan Mandaric marked a disastrous end for an £8m investigation which failed to yield a single conviction.
Mandaric and former Portsmouth FC chief executive Peter Storrie were also cleared of £600,000 tax dodge charges at a previous trial, it can now be reported.
Outside Southwark Crown Court, a tired-looking Redknapp, flanked by son Jamie, said: “It really has been a nightmare, I’ve got to be honest.
“It’s been five years and this is a case that should never have come to court because it’s unbelievable really.
“It was horrendous you know but it was a unanimous decision. The jury were absolutely unanimous that there was no case to answer.”
Redknapp nodded to the jury before hugging Mandaric as the jury found them not guilty on all counts.
Former Liverpool star Jamie, who stood by his father throughout the trial, said: “Just glad it is all over.”
Redknapp was already 10/11 with one betting firm to take over from Capello at some time in the future, but bookmaker Coral last night stopped taking bets on Redknapp becoming the next England manager.
“We have taken fortunes all day on Redknapp becoming the next England boss after his success in the courts but the Capello news sent the betting on him into the stratosphere,” said Coral spokesman Simon Clare.
Roy Hodgson, Stuart Pearce and Jose Mourinho were also linked with the job after Capello left his post with immediate effect.
Redknapp, meanwhile, has led Spurs trough the club’s best era during the Premier League history.
Redknapp was at times moved to the verge of tears during his trial as the Crown alleged he told a pack of lies to get off the hook.
But jurors accepted Redknapp and Mandaric’s evidence that the account in the name of Redknapp’s dog, Rosie, was nothing to do with footballing matters at Portsmouth.
Redknapp admitted lying to News of the World reporter Rob Beasley about the account being a bonus for the £3m profit made by the club for the sale of England striker Peter Crouch.
But Redknapp and Mandaric said in court that the money was an investment not liable to tax.
The verdicts mark a disastrous end of an exhaustive inquiry into football corruption by the tax authorities and City of London Police.
Mandaric told reporters: “I’ve got to go somewhere to try to pinch myself and wake me up from that horrible dream that I had in the past. As we said in the statements, I always believed in the truth, and always believed in the British justice system.”
The case served up high courtroom drama over two-and-a-half weeks.
In an impassioned display in the witness box, Redknapp accused Detective Inspector Dave Manley of “staring” and shouted at prosecutor John Black: “You think I put my hand on the Bible and told lies? That’s an insult, Mr Black, that’s an insult.”
Redknapp said he was “a fantastic football manager, not a hard-headed businessman” and had always paid too much tax.
He also revealed that he had squandered millions in bad investments and had the writing ability of a two-year-old.
Serbian Mandaric, an entrepreneur behind a multibillion-dollar business empire, claimed he had paid £100m in taxes during his time in football, adding: “Did I suddenly go crazy?”
Mandaric and Redknapp embraced in the dock as the verdicts were read out after five hours of deliberations.
Redknapp immediately left the court, while Mandaric walked up to DI Manley to shake his hand and say “Thank you”.
Dec Insp Manley said he accepted the court’s decision as he left court while Chris Martin, of HM Revenue and Customs, said “we have no regrets about pursuing this case”.
In a statement, he added: “We accept the verdict of the jury but I would like to remind those who are evading tax by using offshore tax havens that it always makes sense to come forward and talk to us before we come to talk to you.”
A Tottenham spokesman said: “Everyone at the club is delighted for Harry and his family.
“This has been hanging over him for over four years and the last two weeks have been particularly difficult.”
Any guilty verdict against Redknapp would have effectively ended his chances of becoming England boss, a position he has previously said he would be unable to turn down if offered to him.
Former England manager Graham Taylor said a huge obstacle to Redknapp’s England hopes had been removed. “It makes a clear path, should the FA wish in the future to offer him the England manager’s job when Fabio Capello comes to the end of his reign.”