The trial concerned an insult the Muslim woman claimed was shouted at her in Munich's central train station.
According to the woman, the defendant shouted "you people are arseholes," before adding "you don't belong here."
The case was initially heard in November, and the defendant was found not guilty.
The 59-year-old defendant claimed the woman had commented that "Germans are so intolerant" to which he asked why she was still in Germany, if she didn't like it.
At the time the judge asked the woman - who was born in Germany - if he could see her face, saying he would like to see how she reacted to the proceedings.
Her refusal seems to have played a role in the defendant's acquittal.
The case led to uproar in legal circles and to a retrial, which national media flocked to see if the woman would this time lift her veil.
When the woman testified on Thursday morning, she was accompanied into the court by a police officer with her face and head covered.
The female magistrate gave her the option of withdrawing her case and thus saving herself from having to reveal her face.
But the woman rejected this suggestion, stating confidently that "he attacked me."
She then lifted her veil to reveal her face to the female magistrate. Members of the public sitting behind were not able to see it.
Asked by the judge whether she is often insulted on the street for her appearance, she replied "why does that matter to you?" She then added that she is often spat at and attacked verbally.
A witness to the incident said he heard the man ask the woman why she was wearing a niqab in Germany.
The judge ultimately sided with the defendant and he was again acquitted.