Mark Gilmore was suspended in June 2014 by the county's police and crime commissioner (PCC) in connection with an investigation into the awarding of vehicle contracts in Northern Ireland.
PCC Mark Burns-Williamson said prosecutors had concluded there was no criminal case for the chief constable to answer.
However, Mr Gilmore will not return to his post immediately.
In a statement, Mr Burns-Williamson said: "There remains however a legal requirement for me to consider conduct matters in relation to the police standards of professional behaviour and an independent investigation will be carried out by Lancashire Police.
"While this conduct investigation takes place Mark Gilmore has agreed to work on a transition project for the National Police Chiefs' Council (NPCC) and to delegate day-to-day operational control of West Yorkshire Police to his deputy Dee Collins who has, in his absence, acted as the temporary chief constable."
The Police Service of Northern Ireland (PSNI) had arrested a total of seven men on suspicion of offences including bribery, misconduct in public office and procuring misconduct in public office.
Mr Gilmore, originally from Belfast, joined the Royal Ulster Constabulary, the predecessor of the PSNI, in 1983.
He was appointed Chief Constable of West Yorkshire in April 2013.
West Yorkshire's chief constable has had his suspension lifted.