A court in the capital Phnom Penh issued the ruling in a closed-door hearing today on Sergei Polonsky's fate.
The court also released the 41-year-old businessman, who was detained two months ago in Cambodia's southern coastal town of Sihanoukville following a request by Moscow.
It was not immediately clear whether Polonsky could still face extradition at a later date.
Court officials were not available for comment.
Polonsky was charged in Russia last year with embezzling more than USD 175 million from 80 property investors.