In a decision posted on its website yesterday, the court cited a lack of evidence for the allegation that Collor de Mello, now a senator, was part of a scheme to embezzle public funds using an advertising agency during his 1990-92 presidency.
"The Supreme Court deemed it inadmissible to carry on the penal action against the former president and current senator ... For his alleged involvement in crimes including ideological falsity, passive corruption and embezzlement," the decision said.
In the decision, Justice Carmen Lucia rejected that argument, finding the attorney general's office lacked enough evidence to confirm that Collor de Mello knew about fraudulent contracts with the advertising agency.
Collor de Mello, who was the first president directly elected by voters after Brazil's military rule, tried to resign the office in 1992 to avoid an impeachment trial. But the Senate tried him anyway and barred him from holding public office for eight years.
David Fleischer, a political scientist at Brasilia University, said Collor de Mello has been absolved in all the criminal proceedings that arose from the scandals mostly because the time limit had expired.
Collor de Mello was elected a senator in 2006.