The killing in September was one of a number of police shootings of unarmed black men across the United States in recent years that have heightened concerns about possible police misconduct.
Shelby, who is white, said she fired out of fear when she killed Crutcher, who had his hands above his head.
Before reaching a verdict Wednesday night, the nine white and three black jurors asked the judge if they could explain their decision in court.
The judge told them they could only announce their verdict in court but said they were free to explain it publicly following the trial's conclusion.
Shelby left without making a statement after the verdict.
Family speaks out
But members of Crutcher's family tearfully walked out of the courtroom, with some saying the verdict was hard to accept.
"This is definitely a tough pill to swallow," said sister Tiffany Crutcher. "Terence's hands were up. Terence was not an imminent threat. Terence did not attack her. Terence didn't charge at her. Terence was not the aggressor. "
Their father, Joseph Crutcher, said the verdict was unjust.
"Let it be known that I believe in my heart that Betty Shelby got away with murder," he said. "I have four grandchildren that are at home now, that have lost their daddy."
Shortly after the jury's decision, demonstrators gathered outside the courtroom in a peaceful protest.
"Bring her out," the crowd yelled, referring to Shelby. "No justice, no peace, no racist police!"
Oklahoma Gov. Mary Fallin said residents have a right to express their opinions but they should do so in a peaceful manner.
"I ask Oklahomans to respect our criminal justice system and especially the jurors, who heard the evidence from both sides in this case," she said.
How the shooting took place
On September 16, 2016, Crutcher's SUV was found stalled in the middle of the street. A witness called 911 and said a man was running away from the vehicle, warning it was going to blow up.
Shelby testified she arrived on the scene and approached the vehicle and cleared it, not seeing anyone inside.
As she turned back to her patrol car, she saw Crutcher walking toward her, she testified. He alternated between putting his hands in his pockets and putting them in the air, Shelby said.
Crutcher did not comply with her commands to "show me your hands," she testified. She also said he was sweating heavily and smelled of PCP chemicals.
Crutcher ignored orders from Shelby and another officer on the scene, Tyler Turnbough, according to Shelby's testimony. She testified that Crutcher put his hands on the SUV and moved to reach into the vehicle.
Her police training taught her that "if a suspect reaches their hands inside of a car, don't let them pull them out," she testified.
"We're not trained to see what comes out of a car," Shelby said. "We're trained to stop a threat, and by all indications, he was a threat."
At that point, Shelby fired her weapon and Turnbough fired his Taser, she testified.
Crutcher was found to be unarmed after the shooting.
Shelby: Death was Crutcher's fault
Shelby was arrested shortly after officials released videos of the shooting
, which showed Crutcher walking on the road with his arms in the air before being shot. She was charged with felony manslaughter.
Prosecutors said in arrest filings
that Shelby "reacted unreasonably by escalating the situation" into a fatal encounter.
They asked Shelby why she didn't use a Taser instead of a gun. Prosecutors also asked her where blame lay in the fatal encounter.
"Is Terence Crutcher's death his fault?" Tulsa County Assistant District Attorney Kevin Gray asked.
"Yes," Shelby replied.
Crutcher's supporters condemned the defense's attempts to paint him as a villain. Shelby's lawyers cited an autopsy that found PCP in his system at the time of his shooting, and brought up law enforcement experts who had had encounters with him dating back to 1995.
"In spite of anything that Terence may have done in his past that may have a negative turn to it, it does not justify murder," said Dr. Rodney Goss with Morning Star Baptist Church. "It doesn't matter; she didn't have a toxicology report when she murdered him. She didn't know about anything in his past when she murdered him."
Racial disparities persist
Gerard Lindsey, chairman of Tulsa Fraternal Order of Police, said there were no winners following the verdict.
"There's still a family that has dealt with a tragedy here, the Crutchers, and we still extend our deepest sympathies to them," he said.
Tulsa Mayor G.T. Bynum said the verdict does not change the fact that more work needs to be done to address racial disparities.
"After considering days of testimony and undergoing its own deliberation, the jury has spoken. I appreciate the jurors' service to our community and respect their verdict," Bynum said.
"But this verdict does not alter the course on which we are adamantly set," he said. "It does not change our recognition of the racial disparities that have afflicted Tulsa historically. It does not change our work to institute community policing measures that empower citizens to work side by side with police officers."
Leon Skillen is a Tulsa father of three -- two sons, 26 and 15, and a daughter, 23 -- and he explained to CNN after the verdict that he and his wife always tell their kids there are good police officers and bad ones. They should always be cognizant of how they conduct themselves around law enforcement, he said.
"I'm their dad and an adult, and I tell them even I get nervous when the police get behind me," he said.