The alert began after a woman in Canada called the police from a payphone to say a man on board had explosives on him.
The Boeing 777 with 273 people on board was diverted to Sweden while en route from Toronto to Karachi.
A Canadian man of Pakistani origin, in his '30s but whose identity was not made public, was detained after the plane landed as the passengers were evacuated. After being questioned, he was set free.
"The suspicions against the man were not sufficiently strong for an arrest order and he is therefore free to leave Sweden," the prosecutor's office said in a statement.
Police earlier said they had found no explosives on the man or the plane, which departed again before he was set free.
Stockholm district police spokesman Ulf Lindgren said the man would get help with the practical details of how to reach his planned destination.
The Swedish police have declined to say whether they view the incident as a hoax, saying only that they had had to take it seriously. In Canada, a spokeswoman for the Royal Canadian Mounted Police said investigations were continuing.
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