53-year-old Social Democrat Abdo Goriyo was accused of having assisted Syria's Charges d'Affaires, who had planned to kidnap his daughter and take her back to Syria because of a relationship she was having.
The prosecutor has now ruled that Goriyo's involvement lacked intent.
"It is not criminal to give advice to the father," prosecutor Katarina Lenter to the Metro daily.
The alleged plan to kidnap the daughter was revealed when Security Service (Säpo) bugged the Syrian diplomat's telephone in order to procure proof that the diplomat was engaged in illegal espionage.
The recorded material included details of bugged conversations between the Syrian Charges d'Affaires and Social Democrat politician Abdo Goriya, who was arrested near his home last May.
Goriya, 53, was later remanded in custody on suspicion of conspiring in April and in May to kidnap the diplomat's 18-year-old daughter, who the diplomat said had “brought dishonour” on him by entering into an amorous relationship with a schoolmate.
The Stockholm politician, who has Syrian roots, denied committing an offence, arguing that he simply wished to assist the diplomat with his family problems.
The preliminary investigation into the case was closed in November 2010, but was reopened in March and has now led to Goriya being cleared of all suspicions.
Abdo Goriya has in the meantime taken a time-out from all his political responsibilities pending a decision on the case.
The diplomat was expelled in May 2010 and left Sweden with his family. The diplomat's daughter remains in Sweden and is receiving police protection.