Jeff Winter's home in Middlesbrough was searched by officers from Strathclyde Police's national football co-ordination unit in September.
The investigation was prompted by allegations that sectarian remarks were posted on the former Barclays Premier League referee's website after Celtic beat Rangers 1-0 in December last year.
Mr Winter's legal team at Glasgow-based Bridge Litigation said proceedings will be going no further.
"We confirm that comments posted on the website of Jeff Winter have been the subject of a full and thorough investigation by Strathclyde Police," a statement said.
"We have been informed by the procurator fiscal's office that the results of this investigation have now been fully reviewed and considered by them.
"We are advised that no prosecution of Jeff Winter is currently anticipated in respect of these matters."
A Strathclyde Police spokeswoman said: "Following a full and thorough investigation into a complaint regarding online offensive comments, officers submitted a subject report to the procurator fiscal on the circumstances, the outcome of which was insufficient evidence to proceed at this time."
Mr Winter said he was "delighted" at the news.
"Strathclyde Police conducted an investigation that included a search of my home in September of this year. Subsequent to this search I have been informed by my solicitor Liam O'Donnell that I am no longer under investigation," he said.
"I am delighted with this news that ends almost 12 months of real stress and concern for myself, my family and associates."
The national football co-ordination unit was set up to police football matches across Scotland and to tackle disorder, violence, sectarianism and hate crime associated with the game.
Mr Winter refereed hundreds of football matches in England, ending his career after the 2004 FA Cup Final between Manchester United and Millwall.