The Supreme Court upheld a controversial verdict that found him mentally unfit to stand trial for human rights crimes during his 17-year rule.
The latest ruling is a defeat for rights lawyers who had exhausted the appeals process but resorted to a little-used tactic earlier this year to try to reopen the trial against the 86-year-old former ruler.
But the decision - by four judges to one - was widely expected.
The court ruled that General Pinochet's mental health was indeed fragile and that proceedings against him should be permanently suspended.
Case dismissed
The court's secretary, Carlos Meneses, said: "The Supreme Court... decided that the proceedings against General Pinochet should not continue and, consequently, dictates a dismissal in his favour."
In May, Chilean lawyers had asked the court to annul the June 2001 ruling that Mr Pinochet could not be tried under Chilean law because he suffered a mild form of dementia.
The former ruler was accused of covering up killings and abductions by a military death squad after seizing power in a bloody 1973 coup.
The suspension of the trial last year was widely seen as ending longstanding efforts at home and abroad to prosecute Mr Pinochet.
But the lawyers had alleged faulty medical exams and procedural flaws to try to overturn the verdict.
Opponents of Mr Pinochet emphasised that he had never been declared innocent.
Prosecuting lawyer Hugo Gutierrez said: "He remains indefinitely accused of being the author of the crime but is no longer part of the proceedings because of being insane or demented."
Chile's population is divided sharply between those who blame Mr Pinochet for widespread abuses and those who praise him for creating economic stability.
Some 3,000 people were killed or disappeared during his 1973-90 rule.