The 26-year-old served a provisional 30-day suspension after testing positive for a 'fat burner' in March.
Sakho admitted taking the substance, but Uefa had to investigate whether it was actually prohibited.
Its control, ethics and disciplinary body dismissed the case after a hearing including experts from World Anti-Doping Agency-accredited laboratories.
"I am happy that this is finally over," Sakho said. "It's been a difficult time for me but I knew I had done nothing wrong.
"I am looking forward to getting back in the team and playing again."
Centre-back Sakho's failed test followed Liverpool's Europa League last-16 second-leg tie against Manchester United on 17 March.
He was eligible for selection for his country for Euro 2016 but was left out of the squad.
Liverpool said in a statement: "We are pleased for Mamadou that he can now resume his playing career."
Liverpool and France defender Mamadou Sakho has had a doping case against him dismissed by Uefa.