The Crown Prosecution Service has concluded that there is insufficient evidence to press charges of common assault against Annie Sturrock, a teacher at Llanrumney high school in Cardiff.
She was accused of having taped shut 11-year-old Ben Deacy's mouth, after he persisted in talking in class. A report she sent home to his mother read: "Excellent work - once I taped his mouth shut!"
Ben's mother, Kim Morgan, lodged a complaint with Cardiff council, and the incident was the subject of an eight-week police investigation.
Ms Sturrock, who was absent from school on sick leave following the incident in February, returned to school this week to help GCSE pupils to prepare for their exams.
Martyn Thomas, head of criminal justice for Cardiff CPS, said: "Our judgement was that there was not sufficient evidence to secure a conviction. There is no doubt that false complaints are sometimes made, and there need to be judgement calls in difficult situations.
But that's not to say there weren't matters of public concern, that other authorities might want to look into."
Cardiff council conducted its own investigation. A spokeswoman said: "We have concluded that all appropriate procedures have been taken. There will be no further action."
Ms Sturrock would not comment on the case. But Rex Phillips, Cardiff secretary of her union, the National Association of Schoolmasters Union of Women Teachers, said: "I'm glad that common sense has prevailed.
"Whenever an allegation is made against a teacher, it causes considerable distress and trauma. I don't think anyone can understand it, unless they've been through the same thing themselves."
Ms Sturrock and Mr Phillips will meet Don Barnfield, Llanrumney head, next week to discuss the circumstances of the case fully. Mr Barnfield was unwilling to comment on the case.