Muslim groups had accused the publication, "Charlie Hebdo," of insulting Muslims by reprinting cartoons that first appeared in a Danish newspaper last year, provoking widespread protests.
But the court said the cartoons were covered by French laws governing freedom of expression.
The announcement triggered applause in the crowded Paris courtroom.
The newspaper's editor, Phillippe Val, called the ruling a victory for secular French Muslims.
The Union of Islamic Organizations of France, one of the groups that brought the suit, said it planned to appeal.
(Reuters, AP, AFP)