The country’s supreme court has upheld the acquittal of former detective Goncalo Amaral, who was sued for libel by Kate and Gerry McCann after he accused them of faking her abduction and concealing her body.
Mr Amaral wasoriginally ordered to pay 606,000 euros to the couple after the two-year trial came to an end in 2015.
However the conviction was overturned in April last year after he won an appeal against the ruling.
Lawyers for the McCanns then took the case to Portugal’s top court, which has now ruled that the allegations are protected under laws covering freedom of expression.
Judges have reportedly decided Mr Amaral’s claims are not abusive and remain “within acceptable limits in an open and democratic society”.
In defence, Mr Amaral argued that claims in his book, The Truth of the Lie, originated from the police investigation into the little girl’s disappearance.
While the decision in Portugal is final, it could be appealed before the European Court of Human Rights.
Madeleine, from Leicestershire, was three years old when she went missing while on a family holiday in Portugal in May 2007.
Her disappearance triggered one of the most high profile missing persons investigations in British history.