The Sindh High Court also acquitted three others accused in the case: Fahad Naseem, Sheikh Adil, and Salman Saqib, who were earlier sentenced to life in prison.
A two-judge bench headed by Justice Mohammad Karim Khan Agha announced the verdict on the appeals filed by the convicts 18 years ago. It was expected that the seven-year sentence will be counted as time served, said Naveed.
"The murder charges were not proven, so he [court] has given seven years for the kidnapping", Naveed told Reuters by telephone.
Saeed has already spent 18 years in prison in southern Hyderabad on death row. "He will be out in a few days", Naveed said.
He had been researching Islamist militant activity in Karachi in the wake of the 11 September 2001 attacks on the US. Video emerged a few weeks later of his murder.
"The prosecution cannot stop their release in this case, unless they produce a Supreme Court interim order", Muhammad Farooq, a lawyer at the Sindh High Court said, adding that the government could seek to keep them detained by using a law related to the maintenance of public order.
In January 2011, a report released by the Pearl Project at Georgetown University following an investigation into his death revealed that the wrong men were convicted for Pearl's murder.
"Legally they can not stop their release in this particular case", Farooq said.
He was arrested in India in the 1990s for his involvement in the kidnapping of western tourists in 1994 in support of Muslim separatists battling Indian security forces in the disputed Kashmir region.
23, 2002 in Karachi while researching links between Pakistani militants and Richard C. Reid, who became known as the "shoe-bomber" after he was arrested on a flight from Paris to Miami with explosives in his shoes.
An American psychologist who talked to Mohammed said he had confessed to beheading Pearl, according to AFP.
The incident came three years after Sheikh, along with Jaish-e-Mohammad chief Masood Azhar and Mushtaq Ahmed Zargar, was released by India in 1999 and given safe passage to Afghanistan in exchange for the almost 150 passengers of hijacked Indian Airlines Flight 814.