Zaid al-Hilli, who was arrested in June last year on suspicion of conspiracy to commit murder, had his bail cancelled because there was not enough evidence to charge him, Britain's Surrey Police said in a statement.
"At this stage there is insufficient evidence to charge him with any criminal offence and no further police action is being taken at this time," it said.
But the prosecutor in charge of the French probe said he had not been exonerated as far as they were concerned.
Saad al-Hilli was shot dead along with his wife and her mother in September 2012 in a woodland car park close to the village of Chevaline, in the hills above Lake Annecy in southeast France.
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His two daughters, aged seven and four at the time, survived the gruesome attack but French cyclist Sylvain Mollier, apparently an innocent bystander, was also killed.
The Hilli brothers were engaged in a bitter inheritance dispute which French investigators believed was the motive behind the killings.
"This remains a French-led investigation and officers from the Surrey and Sussex major crime team continue to work closely with the French authorities," the statement said.
"We have carried out exhaustive enquiries in the UK on a number of active lines of enquiry."
Asked outside his home how he felt, Hilli replied: "Really just relieved, that is all."
He has publicly protested his innocence, accusing French investigators of a cover-up.
In October he told BBC television: "They are covering up for someone in France in that region and they know it.