Eileen Davenport was suspended as head of English at Clarendon House grammar school, in Ramsgate, Kent, after a group of students claimed in July 2001 that they had found an essay belonging to one student in another's file.
An internal investigation at the school found her guilty of gross misconduct, concluding she had purposely included the work to increase the student's grade, and attempted to cover up her actions by tampering with the essay.
However, the GTC was told on Wednesday that only "circumstantial" and "speculative" evidence was available to link Mrs Davenport with the incident.
The GTC committee ruled there was "no direct evidence to find Mrs Davenport had been involved in any way" in the swapping of essays.
After the hearing, Mrs Davenport, who resigned following her suspension and is now working at Ursuline College in Kent, said: "I am greatly relieved.
It has taken years to clear my name and this has taken a toll on my health.
"I am glad it is all finally over and I wish to thank the GTC for doing a great job."
Her husband Richard added: "This has been a terrible ordeal for my wife. We are very pleased with the outcome and feel it is fully justified. I am only glad that the GTC exists - if it didn't there would be no other way for teachers to fight to clear their names in such cases."