"We're pleased for Starlin that this issue is resolved and glad that he can continue to keep his focus on baseball activities," Cubs general manager Jed Hoyer said.
The state's attorney's office and Chicago police reviewed the case and found insufficient evidence to charge the 21-year-old player, state's attorney spokeswoman Sally Daly said.
Chicago police said in January that they were investigating an allegation of sexual assault against Castro, who said he cooperated with authorities. His attorneys have said the allegations are baseless.
"I'm happy, happy that we got to resolve it," Castro said before Saturday's game against the Cincinnati Reds. "But you know, I stay focused on the field, stay focused on the game. It's kind of a tough thing to think about that. (But I) take that out of my mind and concentrate on baseball."
Castro declined to get into specifics, but said he's learned a lot from the experience and says he now knows to be more careful.
Castro was chosen to the All-Star team last year in his first full major league season, when he batted .307 and led the National League with 207 hits.
Castro is hitting .352 with seven RBIs and seven steals in 14 games this season.
The young star made his major league debut in May 2010. Chicago signed him as an undrafted free agent in 2006.
Information from ESPNChicago.com's Sahadev Sharma and The Associated Press contributed to this report.