In vacating Silver's 2015 conviction, the US Court of Appeals for the Second Circuit in Manhattan cited last year's Supreme Court decision throwing out the corruption conviction of former Virginia Gov. Bob McDonnell.
That case centered around the question of what constitutes an "official action" under federal corruption law.
Silver's is the first high-profile corruption case affected by McDonnell v. United States.
"We are grateful the court saw it our way and reversed the conviction on all counts," Silver's attorneys, Steven Molo and Joel Cohen, said in a statement.
Joon Kim, acting US Attorney for the Southern District of New York, said in a statement that he would retry the case, noting the appellate court found that evidence presented at trial was sufficient to prove the crimes against Silver, even under a new legal standard.
"Although this decision puts on hold the justice that New Yorkers got upon Silver's conviction, we look forward to presenting to another jury the evidence of decades-long corruption by one of the most powerful politicians in New York State history," he said.
"Although it will be delayed, we do not expect justice to be denied."
Silver's fall from grace
Judge Jose Cabranes, writing for the three-judge panel, said the instructions to the jury that convicted Silver were erroneous under the narrower definition of "official action" established in the McDonnell case.
"We recognize that many would view the facts adduced at Silver's trial with distaste," Cabranes wrote.
"The question presented to us, however, is not how a jury would likely view the evidence presented by the government. Rather, it is whether it is clear, beyond a reasonable doubt, that a rational jury, properly instructed, would have found Silver guilty."
Silver's fall from grace was remarkable. As Speaker of the Legislature's Democrat-controlled lower house, he held significant power over the operation of New York government, particularly over the real estate industry and health care funding.
He was arrested on January 22, 2015,
however, one day after sharing the stage with Gov. Andrew Cuomo during the State of the State address in Albany.
Nearly $4 million in bribes and kickbacks
In November 2015, the 73-year-old politician was found guilty of two counts of honest services wire fraud, two counts of honest services mail fraud, two counts of extortion under color of official right and one count of engaging in illegal monetary transactions. He was sentenced to 12 years in prison in May 2016.
Prosecutors presented evidence that they said showed Silver used his political clout to gain nearly $4 million through bribes and kickbacks.
The lawmaker was accused of masking the payments from public scrutiny by disguising them as income from what he claimed was a personal injury law practice, according to prosecutors.
"The evidence was strong," Preet Bharara, the former US attorney who brought the case, tweeted Thursday. "The Supreme Court changed the law. I expect Sheldon Silver to be retried and re-convicted."
The McDonnell case
In the McDonnell case, Chief Justice John Roberts, writing for the Supreme Court in June 2016, set a clear definition of the term "official action" and how it can be used in corruption convictions.
"In sum, an 'official act' is a decision or action on a 'question, matter, cause, suit, proceeding or controversy," Roberts wrote. "Setting up a meeting, talking to another official, or organizing an event (or agreeing to do so) -- without more -- does not fit that definition of an official act."
He also said that political corruption can still be prosecuted by the government, and noted that McDonnell's actions were "distasteful."
McDonnell, once a rising star in Republican politics, was convicted on federal corruption charges in 2014. He was found guilty of violating the law when he received gifts, money and loans from Jonnie R. Williams, the CEO of a Virginia-based company, in exchange for official acts seen as favorable to Williams and his business.
The government argued that McDonnell received loans, deluxe shopping trips and golf outings and in return used the power of his office to help Williams' company.
But McDonnell's lawyers countered that his actions were limited to routine political courtesies and he never put his thumb on a scale by exercising government power on Williams' behalf.
The case hinged on what constitutes an "official action" under federal corruption law. At oral arguments, several justices searched for the proper line to draw between the regular activities of a politician and actions that could violate corruption laws.