The inquiry into Msgr Richard Loomis lasted 10 years.
It was looking into allegations he abused a teenage boy whilst teaching at a Catholic high school in Los Angeles. A lawsuit was brought against him on the same issue in 2003.
Investigators also identified a second boy who made claims against the priest.
It was alleged the abuse took place between 1969 and 1971 before Fr Loomis, 68, was ordained.
He's been on temporary inactive ministry whilst the investigation was ongoing but he'll now return to the priesthood.
A statement from the Archdiocese of Los Angeles said: "After ten years of exhaustive investigation and canonical trial, a tribunal of the Holy See has definitively determined and ruled that no allegations of sexual misconduct of any kind alleged against Monsignor Richard Loomis have been proven.
"Monsignor Loomis has always professed his innocence of these accusations.
"Now that the allegations against him have been conclusively resolved, Canon Law provides that the temporary restrictions on Monsignor Loomis' public exercise of his priesthood have ceased."