The court ordered a retrial of the case.
The students were also charged with illegal protesting, blocking roads, and resisting authorities.
It is unclear if the students will be released pending the retrial.
This is the second cancellation of prison sentences against Al-Azhar students within a week, Ahramonline reported.
Last Sunday, the Court of Cassation overturned three-year prison sentences against 17 students, also on rioting charges, and ordered a retrial.
Many students were expelled from the university by Al-Azhar's high board over their participation in protests that turned violent in 2013 and 2014.
Most of the expulsions were later overturned by Egypt's Administrative Court which said it was safeguarding students' "educational future and welfare."