Baldwin had accused Costner of cheating him and his business partner in a deal to sell oil clean-up devices to BP after 2010's Gulf of Mexico oil spill.
A federal jury in Louisiana deliberated for two hours before rejecting Baldwin's claim for more than $17m (£11m) in damages.
Later Costner said he was grateful to have been able to clear his name.
"My name means more to me than money and that's why we didn't settle," said Costner.
He went on to praise the jury for "doing their best to understand everything" in a difficult case.
Baldwin, along with his business partner Spyridon Contogouris, claimed they would not have sold their shares in Costner's company Ocean Therapy Solutions when they did if they had known BP had put down a deposit on buying equipment worth $52m (£33m).
Baldwin sold his shares for $1.4m (£890,000) and Contogouris sold his for $500,000 (£318,000) in June 2010.
In court, Baldwin said he would have held out for more money if he had known about the potential BP deal.
The $17m (£11m) in damages Baldwin and his business partner were claiming was the amount they estimated they would have made from the fulfilled order.
Costner and his business partner Scott Smith said Baldwin and Contogouris knew BP was preparing to give a deposit but still they decided to sell-up.
Costner said he never saw Baldwin contribute anything to their company's efforts to persuade BP to use the centrifuges.
Baldwin said no one had asked him to invest any capital or lobby BP but said he used his celebrity to market and promote the centrifuges while he also worked on a documentary about the nation's worst offshore oil spill.
After the verdict Baldwin asked his attorney James Cobb to speak on his behalf.
"We're disappointed. We thought we proved rather convincingly that these two guys, Mr Costner and Mr Smith, defrauded us," said Cobb. "The jury saw it a different way but we respect the jury's verdict."
In June 2010 BP deployed a few of the oil-separating centrifuges it had ordered from Ocean Therapy Solutions.
The company capped the well in the Gulf of Mexico the following month, and it was permanently sealed in September 2010.