Kerimov faced charges of laundering the proceeds of tax evasion following his arrest in November, prompting the Russian government to summon France's deputy ambassador and the Duma to claim the detention violated diplomatic immunity.
Charges against Swiss banker Alexander Studhalter, who was accused of helping Kerimov buy properties illicitly, were also dropped.
Kerimov, who is estimated to be worth more than six billion euros, was suspected of buying five luxurious villas on the Cap d'Antibes millionaires' playground, with much of the price being paid in cash.
His lawyers, Jacqueline Laffont, Nikita Sichov and Pierre Haik, argued their client could not be prosecuted for money-laundering because it had not been proved that the money involved came from illegal activity.
They claimed prosecutors of really wanted to prosecute Kerimov for tax evasion but used the money-laundering charge to dodge a finance ministry right of veto on fiscal fraud cases.
A reform of the veto is currently being debated in the French parliament.
Prosecutors have five days to decide whether to appeal.
Rich from privatisation
After his arrest, Kerimov's passport was confiscated and he was required to pay 40 million euros' bail.
But the terms of his bail were eased to allow him to fly back and forth between France and Russia.
Originally from the North Caucasus Russian republic of Dagestan, he started work in a Soviet transistor factory but made his fortune from the privatisations that followed the collapse of the Soviet Union.
He has owned stakes in Russian energy, banking and mining giants such as Gazprom, Sberbank and potash producer Uralkali.
He once controlled Dagestan's Anzhi Makhachkala football club, helping it to top the Russian league by pouring millions into buying players such as Roberto Carlos and Samuel Eto'o.
But after losing a significant part of his fortune in 2008, he sold most of his shares in the club.
His family now controls Russia's largest gold producer, Polyus.
In 2006 Kerimov crashed his Ferrari Enzo while speeding along Nice's seafront, sustaining severe burns.