Ma is now expected to press ahead with his presidential campaign, based on a platform of calling for closer ties with mainland China and a strengthened Taiwan economy.
He is standing against Frank Hsieh of the ruling Democratic Progressive Party (DPP), which favours full independence for Taiwan.
Addressing reporters after Friday's ruling, Ma attacked prosecutors for bringing the case against him.
"I feel I have been slighted," he said.
"Honesty and integrity have been my motto, but I have been treated unfairly"
Ma Ying Jeou
"Honesty and integrity have been my motto, but I have been treated unfairly (by prosecutors)."
He said the case was "only the beginning of another wave of ugly tactics to crush me," accusing the ruling Democratic Progressive Party (DPP), which has been in power since 2000, of trying to smash his presidential bid with underhand tactics.
Early opinion polls ahead of the March presidential vote have given Ma a 20-point lead.
He has argued that the failure of the DPP to agree to direct air and sea links with China is undermining Taiwan's economy.
Ma also says a campaign by Chen Shui-bian, the current president, to emphasise Taiwan's separate identity is ratcheting up tensions with the mainland and damaging the island's relations with the United States.
Hsieh has countered by saying that Ma's liberal China policies run the risk of dulling Taiwan's identity.
Chen is barred from standing again for the presidency having already served two terms.