Sergei Polonsky expressed satisfaction with the ruling and said he would spend up to $100 million developing an island he has purchased off Cambodia's southern coast.
Supreme Court Judge Kim Sothavy said Cambodian law did not allow for sending Polonsky back to Russia because the two countries do not have an extradition treaty.
The real estate tycoon was charged in Russia in June last year with embezzling 5.7 billion rubles (US$175 million) from 80 property investors. He was arrested by Cambodian authorities in November after Russian authorities had him added to an Interpol list of wanted criminals, but was released on bail in January after a preliminary ruling against extradition.
Polonsky did not attend Friday's hearing. His Cambodian lawyer, Benson Samay, told reporters that the threat of extradition was now over, and his client had the right to stay in Cambodia.
Polonsky, speaking to reporters later at his lawyer's office, said he would reveal in the next few months his master plan for developing the island he has bought, with facilities to include housing and a school.
He said he received permission to develop the island from the Cambodian government 18 months ago.
He also insisted he was innocent of embezzlement charges, and claimed to have owned property worth as much as $4 billion.
He described the case against him as extortion carried out by people who wished to put him in prison so they could take control of his holdings.
"Thank you to the Cambodian government, the king, the royal family, the lawyer and my team," Polonsky said.
Polonsky first came to public attention in Cambodia in December 2012, when he allegedly attacked the crew of a boat during a cruise off Cambodia's southern coast, near his island. He was jailed for more than three months on assault charges before reaching an out-of-court settlement.
The Russian news agency Interfax reported earlier this month that new fraud charges had been brought against Polonsky, but it was unclear if they had been communicated to Cambodian authorities.