The criminal court in Bangkok has yet to publicly announce Friday's decision.
"The case was dismissed," Thaksin told reporters with a smile as he left the court house.
His lawyer earlier confirmed the decision to Reuters but gave no reason for the dismissal.
The case was brought by the royalist military alleging Thaksin, 76, had violated Thailand's strict lese-majeste law during a 2015 interview with foreign media while in self-imposed exile.
Thaksin, who appeared at the court with a yellow necktie, the colour associated with Thailand's monarchy, had denied wrongdoing. He has repeatedly pledged allegiance to the king, who is enshrined in the Thai constitution as being in a position of "revered worship", with the palace seen by royalists as sacrosanct.
The divisive billionaire remains a major force in Thai politics despite being retired and having previously spent 15 years in self-imposed exile before his return to the country in 2023.
Although he has no official role in government, Thaksin remains politically active and is widely seen as the power behind the ruling Pheu Thai party led by daughter Paetongtarn Shinawatra, which is losing popularity and hanging on by a thread a conflict with neighbouring Cambodia and a weak economy.
Thaksin's case was the highest-profile among more than 280 prosecutions in recent years under the controversial law, which activists say has been abused by conservatives to silence dissent and sideline political rivals. Royalists say the law is necessary to protect the crown.
The ruling came a week ahead of another key verdict involving Paetongtarn who has been in power for only a year. Paetongtarn, 39, faces the prospect of dismissal by the Constitutional Court for an alleged violation of ethics over a leaked telephone conversation with Cambodia's former leader Hun Sen, in what she said was an attempt to defuse a diplomatic crisis that later spiraled into five days of armed conflict.
Thaksin also faces another key legal test in September, where the Supreme Court will decide whether his six-month stint in hospital detention prior to his release on parole in 2024 should count as time served in a jail term for abuse of power and conflicts of interest. He could potentially be made to serve the time in prison.
