The United States enquiry into the 9/11 attacks says it has found no evidence the Saudi government funded al-Qaeda.
Suspicions about Saudi Arabia have embarrassed the US
It also clears the wife of the Saudi envoy to the US, who had been alleged to have given the 9/11 hijackers money.
"The commission dispels two outrageous myths about Saudi Arabia," said Saudi official Adel al-Jubeir.
US Congress members have previously questioned if the Saudi royal family provided support for the 9/11 hijackers and other al-Qaeda operatives.
Saudi Arabia is the birthplace of al-Qaeda leader Osama Bin Laden and 15 of the 19 hijackers on 11 September 2001.
Suspicions about the Gulf kingdom intensified in 2003 when the Bush administration blocked the release of a 28-page section of a congressional report on the attacks believed to focus on terror funding in Saudi Arabia.
Princess Haifa al-Faisal, wife of Prince Bandar Bin Sultan, Saudi Arabia's long-standing ambassador in Washington, was at one point implicated for making donations worth $130,000 to the wives of two friends of the hijackers in San Diego.
But the commission report said there is no evidence that the two men, Osama Basnan and the other Saudi, Omar al-Bayoumi, provided funding to hijackers Khalid al-Mihdhar and Nawaf al-Hazmi.
BBC Middle East analyst Roger Hardy says Saudi officials have some reason to feel relieved but they are not entirely let off the hook.
The report identifies Saudi Arabia as the primary source of al-Qaeda funding.
"Al-Qaeda found fertile fund-raising ground in the kingdom, where extreme religious views are common and charitable giving is essential to the culture and, until recently, subject to very limited oversight," the report says.
Saudi Arabia has always denied being soft on Bin Laden's organisation - but US officials say it has only started cracking down on funding terrorism since a concerted al-Qaeda bombing campaign began in the kingdom in May 2003.
Mr Jubeir, who is foreign affairs advisor to Saudi Arabia's de facto ruler Crown Prince Abdullah, praised the commission for dispelling "myths" that had been "perpetuated" by Congress.
"Now there are clear statements by an independent commission that separate fact from fiction," he said.
While Saudi Arabian officials have not been linked with the 11 September attacks, the commission says it is still not known where the money to fund the attacks originated from.
The operation - which claimed nearly 3,000 lives in airliner crashes in New York, Washington and Pennsylvania - cost between $400,000 and $500,000 the report says.