The decision gave the embattled Israeli leader a small boost at a time when he already is facing three separate criminal investigations in unrelated real-estate and political corruption cases. Olmert has denied any wrongdoing, but the investigations have cast a cloud over his efforts to restart peace talks with the Palestinians.
In a statement Tuesday, deputy state prosecutor Yariv Regev said legal officials determined "there is not enough evidence to support suspicions that would justify the opening of a criminal investigation" into two real-estate deals.
Olmert had been suspected of selling a Jerusalem home to a wealthy supporter for hundreds of thousands of dollars above market value. The other case surrounded suspicions that he bought a property in a trendy Tel Aviv neighborhood at a steep discount.
The decision does not end Olmert's legal troubles.
Earlier this month, Israel's attorney general ordered a criminal investigation into suspicions that Olmert acted improperly while he was trade minister earlier this decade.
The state comptroller, a watchdog agency, has alleged that Olmert steered a government grant to a friend and arranged improper political appointments.
Last week, Olmert was twice interrogated by police on suspicion he tried to rig the sale of Israel's second-largest bank in favor of two associates while he was finance minister.
Police are also looking into Olmert's involvement in another real-estate deal in which he is suspected of buying a Jerusalem home at a substantial discount from a developer in exchange for arranging construction permits for the builder. Olmert is a former mayor of Jerusalem.
Olmert has dismissed the various investigations as a political witch hunt. But the continuing investigations, along with a series of scandals involving some of his closest associates, have weakened him politically ahead of a U.S.-sponsored Mideast conference.
Israeli and Palestinian negotiators have been trying to work out the outlines of a future peace agreement ahead of the summit. But an indictment against Olmert would weaken his ability to maneuver and could possibly lead to the disintegration of the government.
NATO Secretary General Jens Stoltenberg was surprised to know that the Serbs had not forgiven the alliance for bombing their country. Mr. Stoltenberg wants to now why the ungrateful people did not appreciate NATO's aggression