Prosecutors claimed he dated them 1988, and art dealer Peter Stanley Gant (61) facilitated the sale of two of them.
Whiteley, who died in 1992 aged 53 from a heroin overdose, is one of the country's most celebrated avant-garde artists.
Big Blue Lavender Bay was one of three paintings allegedly created.
It was sold for $2.5 million to Sydney Swans chairman Andrew Pridham.
Orange Lavender Bay was sold for $1.1 million, and Through the Window Lavender Bay was offered for sale for $950,000.
That after Gant purchased an authentic Whiteley in 2007 for $1.65m, Siddique used this to create the so-called fakes.
What the Supreme Court trial heard last year
The pair insisted they were not guilty of two charges of obtaining and one charge of attempting to obtain a financial advantage through deception.
Whiteley's former wife, Wendy, said she knew there was something wrong with the paintings as soon as she saw them.
"The lack of spontaneity, the lack of wit, the lack of spirit - the lack of everything," Ms Whiteley said.
Defence said it was possible Ms Whiteley was unfamiliar with some of his work because the couple had lived apart for a year while Ms Whiteley underwent rehab for heroin addiction.
Book binder Guy Morel, who shared office space with Siddique, said he took photos of Blue Lavender Bay seemingly in various stages of completion during 2007.
The verdict and sentence
A jury found the pair guilty, declining Supreme Court Justice Michael Croucher's invitation for them to return a verdict of not guilty without hearing further evidence.
This is an option given to juries when a case is thought to be so weak the judge believes a guilty verdict would be "unsafe".
Gant was sentenced to five years in prison with a minimum of two and a half years.
Siddique was jailed for three years, with 10 months to be served immediately and 26 months suspended for three years.
However, a stay was put on their incarceration until their appeal.
On Thursday, prosecutors admitted there was a possibility the pair might be innocent based on contradictory evidence from two witnesses.
Appeal judges said the Court of Appeal accepted the guilty verdicts were unsafe and should be quashed.
Wendy Whiteley was "completely stunned" by the men's acquittal, calling the decision "extraordinary" and "absolutely ludicrous".
"Do they (the court) know enough about art to make this decision?" she told AAP.
"I feel sorry for the people who bought the artworks in good faith and I feel sorry for the whole Australian art world."
The two men declined to comment outside court.
