Although Japan had demanded the return of both Korean-made statues, the prosecutor said the second likeness would remain in South Korea pending the resolution of a dispute over its original ownership.
The argument over the fate of the statues, which were stolen from different shrines on the Japanese island of Tsushima in 2012, is a reflection of the troubled nature of Japan and South Korea's historic ties.
Four people were arrested in South Korea in 2013 over the original theft, after they tried to sell the statues which were then confiscated by the authorities.
In its decision today, the prosecutor's office said there was no evidence that the one eighth-century statue had ever been illegally transferred to Japan, and underlined that no claims for its ownership had been made in South Korea.
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"In accordance with the Criminal Procedure Law, the statue will be returned to the original owner in Japan", the office said in a press statement.
The other 14th century statue, however, is claimed by a Buddhist temple in the southwestern city of Seosan, which says it was dedicated to the temple in 1330 but then plundered by Japanese pirates sometime before 1520.
The fact that even one of the statues will be returned prompted a storm of criticism on some Korean social media networks, where the decision was pilloried as a "betrayal" and "pro-Japanese.