Athletic director Bubba Cunningham announced the decision in a statement Thursday.
Artis was indefinitely suspended from the team last fall following his arrest, which was tied to a February 2016 encounter. Artis said he and the female student had consensual sex and he denied wrongdoing.
His attorneys also said UNC determined Artis didn't violate campus policy in his contact with the student. A misconduct decision could have led to expulsion.
Orange County district attorney Jim Woodall dismissed the misdemeanor charges last week because "the matter has been resolved to the satisfaction of the parties."
Artis, a reserve linebacker from Marietta, Georgia, played in two games before last season's suspension.