Horwill faced a disciplinary hearing in Melbourne for the incident involving lock Alun-Wyn Jones in the third minute of the Lions' 23-21 victory at Suncorp Stadium.
Judicial officer Nigel Hampton QC found that, on the balance of probabilities, the second row could not be found guilty of an intentional or deliberate action of stamping or trampling under law 10.4(b).
"After hearing all the evidence I could not find that, when James Horwill's right foot came into glancing contact with Alun-Wyn Jones's face, that he was acting recklessly," Hampton said.
Lions coach Gatland told a news conference on Sunday: "The medical team had a look at him (Wyn Jones) at half-time and put a couple of stitches in his eye at full-time.
"The feeling from us is that it needed to be referred to the citing commission to have a look and for him to make a decision.
"For me, I played in the days when rucking was allowed and I've still got a few scars that bear the witness of some decent ruckings that I had. But the head was sacrosanct and you stayed away from that."
The Lions held on to win the game 23-21 after the Wallabies' replacement fullback Kurtley Beale missed two late penalties, the second on the stroke of fulltime that could have won the game for the hosts.
Having pushed the first effort wide, Beale cruelly slipped as he attempted a lengthy effort that came up short.
"Worst moment of my career? Probably not, no," Beale said on Sunday.
"I was just grateful for the opportunity to be able to play out in front of a fantastic crowd, full of passionate rugby fans. Probably one of the best feelings of my career.
"But you know, it was just a simple error. Misjudgement and you know, I've got an opportunity to be able to turn that around this weekend and practice makes perfect."
The Lions also face the Melbourne Rebels in their final midweek clash of the tour on Tuesday.