Malaysia's attorney-general chambers issued the order last Friday (March 8) not to prosecute Siti Aisyah, according to a letter revealed by the Indonesian embassy in Kuala Lumpur on Monday.
The two young women were accused of smearing VX nerve agent on Kim's face in an airport terminal in Kuala Lumpur in February of 2017.
As the court gave its decision to release her, Siti Aisyah, 26, turned to her Vietnamese co-defendant Doan Thi Huong, 30, in the dock and the two women, who had been facing the death penalty, embraced tearfully. He granted a discharge not amounting to an acquittal.
But at the start of the hearing, prosecutor Muhammad Iskandar Ahmad requested that the murder charge against Aisyah be withdrawn and that she be given a discharge, without providing a reason. "I did not expect it", said Aisyah, who was wearing a red headscarf.
Indonesian ambassador to Malaysia Rusdi Kirana told reporters outside court: "We are pleased with the court decision".
Siti headed back to the Indonesian Embassy, and plans to fly home to Indonesia tonight, embassy officials said.
She was expected to testify for the first time in court on Monday, but she only read a few lines of her prepared statement tearfully. Huong was to have begun giving her defense in Monday's court session, after months of delay.More news: Kelly Released From Jail After Someone Paid His Owed Child Support
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A Malaysian High Court judge found last August there was enough evidence to prosecute Aisyah, Huong and the four North Koreans, who fled the country, on a conspiracy to kill Kim Jong Nam.
"I feel very happy", said Siti Aisyah at a press conference after she was freed. "Both of them were charged on the same evidence, the defence was called on fairly the same grounds", said Salim Bashir, one of Huong's lawyers.
Both deny murder and claim they thought they were part of a TV prank.
"We are grateful the public prosecutor has come to this conclusion, because we truly believe she is merely a scapegoat and she is innocent", he said. Huong's lawyer, Hisyam Teh Pok Teik, added that she was "traumatized by what happened in court".
He was the eldest son of North Korean leader Kim Jong Il, and had lived overseas since 2003. Aisyah told an investigating officer that she was paid around $100 to take part in various pranks outside a Malaysian mall for a Japanese YouTube show.
He had spoken out in the past against his family's dynastic control of North Korea and in a 2012 book was quoted as saying he believed his half-brother lacked leadership qualities. He had been living overseas for years but could have been seen as a threat to North Korean leader Kim Jong Un's rule.
He added that the decision was connected to a moratorium on the death penalty the Malaysian government had implemented a year ago. The government has vowed to abolish capital punishment for all crimes, although parliament still needs to vote on changing the law.