The court in the luxury resort town of Marbella in southern Spain said there was no evidence Connery had been involved in any illegal real estate dealings and dismissed all charges against him, Spain's El Mundo newspaper reported on Monday.
The long-running case involves the illegal re-zoning of a seafront property owned by the Scottish actor to pave the way for the development of luxury apartments.
Oscar-winner Sean Connery sold his Marbella home in 1999 and 72 flats were subsequently built on the site although planning permission only allowed for five units.
Over a dozen people have since been investigated for bribery, fraud and tax crimes in the case, with former Marbella mayor Julian Muñoz and Spanish singer Isabel Pantoja among the high profile convictions.
But the presiding judge said the 83-year-old Connery "never appears in the case taking any decisions, nor does his signature appear in documents which could incriminate him".
Connery had also denied links to former Marbella mayors Julian Muñoz and Jesus Gil in a signed affidavit submitted to the magistrate.
The actor's wife Micheline, however, could still face charges and remains under investigation.
In his ruling on Connery's involvement, the judge lamented the fact that the media had dubbed the trial the "Goldfinger case" after a 1964 James Bond film the actor starred in, saying this implied the investigation related only to the Connerys "when nothing could be further from the truth".
Marbella is a playground for the international jet set and is has been a hub of real estate speculation in recent years.