Pistorius fired four gunshots through a toilet door at his home in Pretoria in the early hours of Valentine's Day last year, killing his girlfriend.
While the state argued that the double amputee murdered Steenkamp after a furious row, Judge Thokozile Masipa believed Pistorius's claims that he mistook the South African model for an intruder when he fired the gun.
Spokesperson for the NPA Nathi Mncube said outside of the High Court: "We respect the judgment that has been delivered. We believed in this instance there was enough evidence to secure a conviction under pre-meditated murder.
"Of course we are disappointed. We are disappointed we did not secure a conviction under premeditated murder and also there was acquittal on the other two [firearms] charges. The matter has not been concluded yet, we are still waiting for a sentence to be imposed."
Culpable homicide in South Africa carries a maximum sentence of 15 years in prison, but Pistorius will not learn his fate until October 13 when he returns to the court.