The court ruled Friday that the men should be let out of prison and be placed under home arrest pending the new trial - for which no date has been set.
Judges found that key facts in the Muslim men's earlier trial had been "wrongly and incompletely established" and prosecution witnesses had offered contradictory testimony.
The killings of the five Christian fishermen in a lake near the capital, Skopje, had been presented by prosecutors as a terrorism-related attack. The defendants denied any connection.
The murders caused riots between Macedonians and members of the ethnic Albanian minority, a quarter of the country's population.
Copyright 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.