Moments after this morning's decision, he tweeted a picture of himself smiling. It was immediately retweeted by actress Pamela Anderson who has visited him at the embassy several times.
— Defend Assange Campaign (@DefendAssange) May 19, 2017
He denies the 2010 rape allegations which he feared would see him extradited to the United States and tried over the leaking of hundreds of thousands of secret military and diplomatic documents.
The focus will now move to the governments of the UK and the US and whether Assange will fly to Ecuador to avoid extradition to America. WikiLeaks tweeted: "UK refuses to confirm or deny whether it has already received a US extradition warrant for Julian Assange. Focus now moves to UK."
Supporters of WikiLeaks founder Julian Assange stand outside of the Ecuadorian embassy. Picture / AP
Today's announcement means Assange is no longer under any investigation in Sweden. British police said before the announcement that Assange is still wanted in Britain for jumping bail. It is not clear if that may change now that the investigation has been dropped.
Swedish investigators had been expected to reveal today whether they would lift a Europe-wide arrest warrant against him in the seven-year-old case.
He has been holed up at the Ecuadoran embassy in London since 2012 and risks being arrested by British police if he steps out of the building.
Today was the deadline for the public prosecutor's office to either renew or lift Assange's arrest warrant before a Stockholm court.
Assange's Swedish lawyer last month filed a new motion demanding that the arrest warrant be lifted after US Attorney General Jeff Sessions said in April that arresting Assange would be "a priority".
The US may look to press charges on Assange. Picture / AP
"This implies that we can now demonstrate that the US has a will to take action... this is why we ask for the arrest warrant to be cancelled so that Julian Assange can fly to Ecuador and enjoy his political asylum," lawyer Per Samuelsson told AFP at the time.
The accusation against Assange dates from August 2010 when the alleged victim, who says she met him at a WikiLeaks conference in Stockholm a few days earlier, filed a complaint.
She accuses him of having sex with her as she slept without using a condom despite repeatedly having denied him unprotected sex.
"I am entirely innocent," Assange wrote in a 19-page testimony released in December 2016.
He argues that the sex was consensual and that the accusations are "politically motivated".
The investigation has suffered from endless procedural complications since it began.
The statute of limitations on the rape allegation expires in August 2020.
In a letter sent to the Swedish government on May 8, Ecuador condemned "the obvious lack of progress" in the investigation despite Swedish officials questioning Assange at the embassy in November 2016.
"It is extremely worrying that six months after the hearing at the Embassy of Ecuador in the United Kingdom, the Swedish prosecutor's office has not yet decided on the judicial situation of Julian Assange," the Ecuadoran Foreign Ministry said in the letter seen by AFP.
Ecuador demands that Sweden either charges Assange or drops the investigation.
Swedish judges have refused to take into account the opinion of the UN Working Group on Arbitrary Detention, which in February 2016 said Assange was effectively "arbitrarily detained" by Sweden and Britain and called for the warrant to be annulled.
