The "Chinatown" director has been under house arrest at a luxury chalet in Gstaad since he was seized in Zurich in September 2009.
U.S. authorities demanded the filmmaker be returned to the States to face sentencing for having sex with a 13-year-old girl in 1977 - as he pleaded guilty to the crime but fled to Europe in 1978 before facing a court.
Officials say that the extradition has now been turned down - because they cannot rule out the possibility that there is a "fault" in the request.
In a statement, a spokesman for the Swiss Justice Ministry says, "The reason for the decision lies in the fact that it was not possible to exclude with the necessary certainty a fault in the U.S. extraditionary request."
