Common Pleas Judge M. Teresa Sarmina ruled Friday that 50-year-old Edward Bracey had established below-average intellectual functioning as demonstrated by an IQ of 74.
The U.S. Supreme Court has barred as unconstitutional execution of anyone deemed by a state to be mentally disabled.
Bracey's sentence is now life in prison without possibility of parole in the 1991 murder of officer Daniel Boyle.
The ruling prompted strong reaction from law enforcement.
Philadelphia District Attorney Seth Williams held a news conference Tuesday morning attended by Boyle's family.
"I would first like to express in person to the Boyle family how disappointed I am with this ruling," said Williams. "My heart goes out to the entire family. Officer Danny Boyle was a true hero. I have known the Boyle family since 1992 when Edward Bracey was tried, convicted and sentenced to death for Danny's senseless murder. This ruling is perplexing, and I can only imagine how devastating it is for the Boyle family. My thoughts and prayers go out to the Boyle family today as they digest this decision."
First Assistant District Attorney Edward McCann also expressed surprise, saying that at post-conviction hearing in 1998, three separate experts testified that Bracey was not mentally retarded.
"Yet here we sit, in January of 2014, a full generation after the murder of Police Officer Danny Boyle - who was 21 at the time of his murder - and a court has ruled he is mentally retarded and not eligible to be executed," said McCann. "The victim's family - who have done nothing but serve this city with strength and character, both before and after Danny's death - have questions about a process that can lead to a result like this, and I for one have no answers."
Earlier, John J. McNesby, president of Lodge 5 of the Fraternal Order of Police, called the decision "an absolute disgrace."
The Associated Press contributed to this report.