The 71-year-old, from Warwickshire, was first arrested in November 2012 by detectives from sex crime inquiry Operation Yewtree, and was rebailed several times.
The Crown Prosecution Service finally announced that there was not enough evidence to charge him over 13 alleged victims, and it was not in the public interest to prosecute over one other.
Frail-looking Starr appeared outside his home yesterday alongside his lawyer Dean Dunham.
The performer said he was "very relieved", adding: "I'm not feeling well, really."
Asked if he had a message for his fans, he said: "Thank you."
Mr Dunham has accused Scotland Yard of a "flagrant breach" of Starr's human rights due to the delays in dealing with his case.
Last month he said that prosecutors had already made a decision over whether to bring charges, but delayed making it public due to the trial of disgraced PR guru Max Clifford.
Mr Dunham said: "I would not like to see anyone else go through what Freddie has gone through."
"At the moment we need to concentrate on getting Freddie back to his health.
"We will be looking at this further. Things have gone wrong here. I have lived this nearly every day with Freddie and you can see the toll it has taken on him.
"He's a man of good character, remains a man of good character, and I would ask the public now to stand by this man."