"I have today held that the injunction granted on 24 January 2008 against the defendant [PDVSA] should be discharged," Judge Walker said in a statement on Tuesday.
"In the absence of any exceptional feature such as fraud, and in the absence of substantial assets of PDVSA located here, the fact that the seat of arbitration is not here makes it inappropriate to grant an order," he said.
Judge Walker said there was no evidence that there was any international fraud involved, which would normally allow a worldwide asset freezing order to be imposed.
Exxon was ordered to make an interim payment of $765,300 to cover legal costs within 21 days.
Gordon Pollock, a lawyer for PDVSA, said the ruling was "comprehensive" and "ground-breaking".
"This will be an important decision for future, a precedent," he said.
Samuel Moncada, ambassador for Venezuela, said the judgment was a victory for Venezuela.
"This was a defeat of the tactics of judicial terrorism used by ExxonMobil," he said.
"This is the beginning of the end of the harassment campaign Exxon instigated against Venezuela. We are planning to fight all of the way," he told reporters at the High Court in London.
Exxon declined to comment on whether it would appeal the ruling, but said it had no impact on the company's claim for compensation for the assets taken during the nationalisation process.
"We think that it's important the court did not question the merits of [Exxon's] underlying claim, but rather concluded that an English court should not issue a pre-judgment worldwide freezing order," Alan Jeffers, a spokesman for ExxonMobil, said.
Last month, Venezuela asked ExxonMobil to resume talks on the nationalisation dispute, sponsored by the World Bank.
It also asked the US oil company to abandon legal cases in New York and London.
ExxonMobil won court orders in New York, London, the Netherlands and the Netherlands Antilles freezing about $12bn of PDVSA assets in those jurisdictions.
Last month, a New York federal judge approved a freeze of $300m in Venezuelan assets held in a US bank, after PDVSA suspended supplies to ExxonMobil.
Venezuela is a major supplier of oil to the United States, but Hugo Chavez, Venezuela's president, is a staunch critic of the US government.