British tax lawyer David Mills said he was "very relieved" following the decision by Italy's highest court to quash his bribery conviction.
Prosecutor Gianfranco Ciani insisted that the estranged husband of Olympics minister Tessa Jowell was guilty of the offence but said the 2009 verdict should be thrown out as the statute of limitations had expired.
In a statement released after the announcement, Mr Mills said he would now be able to "get back to a normal life".
Mr Mills, who was accused of taking a bribe to lie in court to protect Premier Silvio Berlusconi.
The Court of Cassation determined that the statute of limitations had expired. The ruling is a major victory for Berlusconi, whose own trial on related corruption charges was put on hold pending the outcome of Mills's final appeal.
Mr Mills had been accused of taking the £400,000 bribe in return for not revealing details of Italian premier Silvio Berlusconi's off-shore companies during trials in the late 1990s.
In 2004, the lawyer referred to a payment from "Mr B" in a letter he sent to his British accountant.
Both men have denied wrongdoing, with Mr Berlusconi complaining that the charges had been politically motivated.
Mills was found guilty of corruption in February 2009 and sentenced to four-and-a-half years in prison. The decision was upheld in October. But in court on Thursday, prosecutors revealed that the alleged crime took place on November 11, 1999. It had previously been alleged that the money changed hands in late February 2000. It meant that prosecutors were forced to drop the case.
The court also ruled that in the related civil case, Mr Mills was liable to pay 250,000 euros (£221,000) in damages to the Italian government as he had received the bribe.