Eliza Szonert was taken into police custody last week for allegedly grabbing her son while he was with her separated partner at a restaurant earlier this month.
"She can leave Malaysia for home with her son. We have investigated the case and the deputy public prosecutor has decided that there will be no prosecution against her," Kuala Lumpur police chief Tajuddin Mohamad Isa told AFP.
"Our concern is for the well-being of the child," he added.
The Melbourne actress is alleged to have abducted her son from his father Ashley Crick, a businessman now based in Malaysia, at a restaurant in a popular mall in Kuala Lumpur on December 10.
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Various media reports had said she had gone to the restaurant with two men from an agency called Child Recovery Australia.
Tajuddin was unable to confirm when Szonert was expected to leave Malaysia.
Meanwhile The Sydney Morning Herald reported that Szonert was due to fly back to Australia in the next two days, citing the child recovery company involved in the operation.